Question

1) what authority does the AICPA have to punish auditors? the state license board? the PCAOB? the SEC? Provide your authority for your post.

2) How does the SEC regulate auditors who appear before the commission??

Help. Thanks

Answer 1

Answer :- (1.) PCAOB is the authority does the AICPA have to punish auditor.

* The PCAOB oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection. All PCAOB rules and standards must be approved by the U.S. Securities and Exchange Commission (SEC).

* The PCAOB has four primary functions in overseeing these auditors: registration, inspection, standard-setting and enforcement.

* the PCAOB may suspend or bar that person or entity from the public audit industry. Auditors of public companies are prohibited by the Sarbanes-Oxley Act to provide non-audit services, such as consulting to their audit clients.

*  As part of the PCAOB's investigative powers, the Board may require that audit firms, or any person associated with an audit firm, provide testimony or documents in its (or his or her) possession. If the firm or person refuses to provide this testimony or these documents, the PCAOB may suspend or bar that person or entity from the public audit industry. The PCAOB may also seek the SEC's assistance in issuing subpoenas for testimony or documents from individuals or entities not registered with the PCAOB.

(2.) SEC regulations require that annual reports to stockholders contain certified financial statements and other specific items. The certified financial statement must include a two-year audited balance sheet and a three-year audited statement of income and cash flows. In addition, annual reports must contain five years of selected financial data, including net sales or operating revenues, income or loss from continuing operations, total assets, long-term obligations and redeemable preferred stock, and cash dividends declared per common share.

For example :- State licensing boards in a variety of professions, such as boards of ethics or attorney disciplinary commissions, publish Q&A documents to assist practitioners in analyzing similarly highly fact-bound questions. It strikes us as a relatively sound way for the SEC to enhance its guidance on auditor independence.