Question

please explain in detail What is the PCAOB? Please explain what is the law, a describiton of the law.

Answer 1

Public Company Accounting Oversight Board has been established as a part of the Sarbanes and Oxley Act , 2002 with a view to protect investors interest in public companies through a oversight over companies accounting and auditing practices. PCAOB is mainly focused on implementing effective auditing practices, improving audit quality and maintain public trust in the financial and auditing reports.

The Sarbanes and Oxley Act 2002, passed after major financial crimes such as Enron is a United States Federal Law. It has eleven titles and establishes corporate accountability and civil and criminal liabilities for white collar crimes. Title 1 contains provisions of the Public Company Accounting Oversight board.

Some of the major provisions of the Act are :

(i) It requires public companies to evaluate and disclose the functioning of internal controls and independent auditors have to agree to such disclosure.

(ii) Financial reports are to be certified by the Chief Financial Officer and Chief Executive Officer.

(iii) Auditor independence , and outrightly prohibits any non audit work which can be carried out by an independent auditor.

(iv) Prohibits personal loans to directors of the companies

(v) Accelerated reporting of insider trading

(vi) It also requires public companies to have an indepedent audit committee to oversee the relationship between auditor and the company

(vii) Enhanced criminal and civil liabilities for any violations