Question

What is the PCAOB and how does this relate to SOX?

Answer 1

The Public Company Accounting Oversight Board (PCAOB) is a non-profit organisation that regulates auditors of publicly traded companies. The purpose of PCAOB is to minimise risk. This board was established with the passage of the Sarbnes-Oxley Act of 2002 in response to various accounting scandals of the late 1990s. The board's aim is to protect investors and other stakeholders of public companies by ensuring that the auditor of a company's financial statements has followed a set of strict guidelines. PCAOB is overseen by the Securities and Exchange Commission.

The Sarbanes-Oxley Act (SOX), as amended directs the Board to establish, by rule, auditing and related professional practice standards for registering public accounting firms to follow in the preparation of audit reports of public companies and other issuers and broker-dealers. PCAOB rule, compliance with Auditing and Related Professional Practice standards (3100) requires registered public accounting firms and their associated persons to comply with all applicable auditing and related professional practice standards.

Firms that audit public companies, brokers and dealers must register with PCAOB. Such registered firms are subject to inspection of audits they have performed. PCAOB also is involved in setting standards aimed at improving the reliability of audits and may also enforce standards by imposing penalities for infractions.

PCAOB rules below describe the PCAOB standards with which auditors are required to comply.
1. Auditing Standards (3200),
2. Interim Attestation Standards (3300T),
3. Interim Quality Control Standards (3400T), and
4. Interim Ethics and Independence Standards (3500T)