Question

What does the PCAOB abbreviation mean? What is the group's purpose and who are members? On their website, look under the Standards tab. Discuss what types of standards the PCAOB establishes. Which do you think are most useful and why?

Answer 1

PCAOB means Public Company Accounting Oversight Board.

PCAOB is a non profit organisation established by Congress to Protect public interest by promoting informative, accurate, and independent audit reports and to oversee the audits of public companies and broker dealers.

The PCAOB consists of five board members appointed by the SEC(Securities Exchange Commission) to serve full time for five-year terms.

Activities of PCAOB

*Register public accounting firms.

*Auditing Standards, next step is that the registered firms must use auditing standards.

*Inspection of Reports, PCAOB inspects the firms who are engaged and registered under PCAOB in order to verify the whether the firms are following code of conduct. PCAOB, also inspects those firms that audit 100 Public companies are inspected every year and those who audit fewer are also inspected at once in three years.

Types of standards

General Auditing Standards

These standards include, concepts, role and responsibilities auditor, Activities and Communication.

Audit Procedures

This includes standards including

Audit planning, assessment, audit of internal control, procedure for specific aspects of audits, Concluding and Post Audit matters.

Auditor Reporting

This includes reporting on Audit of financial statements, special reports etc.

Each and every standard is important and are interlinked or interdependent, but I consider General Auditing Standards more important or they're more significant. General Principles and responsibilities of independent auditor, role and responsibilities of predefined plays an important role in quality audit. If all the hindrances and obstacles are removed audit can be performed freely and the reports would be fruitful. Auditor must be given free hand to get accurate and exact data and every transaction must satisfy him and must meet standards. So I always consider the first part of Auditing Standards More important.