The Public Company Accounting Oversight Board

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SOX established the Public Company Accounting Oversight Board (PCAOB) to regulate the audit industry to oversee accounting professionals who provided independent audit reports for publicly traded companies (SEC). Key responsibilities include: registering public accounting firms and establishing audit, quality control, ethics, independence, and other standards relating to public company audits (SEC). Conducting inspections, investigations, and disciplinary proceedings of registered accounting firms, as well as enforcing compliance with Sarbanes-Oxley as a whole (SEC) also falls under PCAOB’s responsibility. SEC penalties have increased considerably in the recent years in addition to increased levels of enforcement activities.
SOX had transformed the auditing industry from a self-regulated one to an industry controlled by a quasi-government agency. It also enabled measures to reduce conflicts of interests between auditors and their clients. PCAOB could oversee the actions of external auditors who directly monitors the financial reporting and form the first line of defense against potential earnings or accounting manipulation. Though external auditors were theoretically supposed to provide assurance, there was an inherent conflict of interest in the system of auditing companies. SOX restrictions on non-audit-related service does not show improvement on audit quality. PCAOB is recognized strictly in the United States and has no jurisdiction over issuers, audit committees,
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