PCAOB
Definition
Public Company Accounting Oversight Board, established by SOX to set auditing standards and inspect audit firms performing public-company audits. It replaced the self-regulatory model under which Arthur Andersen had overseen its own quality.
- Created by
- Sarbanes-Oxley Act of 2002
- Primary function
- Set auditing standards and inspect audit firms of US public companies
- Replaced
- Self-regulatory auditor oversight model
Common questions
What is the PCAOB and why was it created?+
The PCAOB is the Public Company Accounting Oversight Board, created by the Sarbanes-Oxley Act of 2002 in response to major corporate accounting scandals. It was established to replace the old self-regulatory model where audit firms oversaw their own quality and standards, which had failed to catch fraud at companies like Enron and WorldCom.
What are the main responsibilities of the PCAOB?+
The PCAOB sets auditing standards for auditors of US-listed public companies and conducts regular inspections of registered audit firms to ensure they comply with these standards. This independent oversight prevents the conflicts of interest that existed when firms like Arthur Andersen policed themselves.
Who does the PCAOB regulate?+
The PCAOB oversees audit firms that audit US-listed public companies. Firms must register with the PCAOB and submit to its inspection and standard-setting authority to maintain their ability to audit public companies.
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Explained in these topics
- Case Studies: Enron, WorldCom, and SatyamPublic Company Accounting Oversight Board, established by SOX to set auditing standards and inspect audit firms performing public-company audits. It replaced t...
- Professional Standards and BodiesPublic Company Accounting Oversight Board, created by the Sarbanes-Oxley Act of 2002 to oversee auditors of US-listed public companies. Sets auditing standards...