The Public Company Accounting Oversight Board

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The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB) to assume the responsibility of overseeing the auditors of public companies. The PCAOB is a private-sector, non-profit corporation. It was established to "protect the interests of investors and further the public interests in the preparation of informative, fair, and independent audit reports". (The PCAOB) Although the PCAOB is a private sector organization, it has many government-like regulatory functions. The PCAOB was created in response to an increasing number of accounting restatements by public companies during the 1990s and a series of recent high-profile scandals like Enron and WorldCom. Prior to the PCAOB, the audit industry was self-regulated…show more content…
Many firms are upset by this rule because of its limitations. However, I believe that this new rule is a good idea. Previous engagements between firms and clients have been given a large notice of when the rule will be in effect. They are given plenty of time to finish their engagements. This new rule may allow small firms more possibilities to increase their clientele. We may be moving away from having a small number of large firms doing all the services to having many firms providing the services. Also, Rule 3523 will ensure independence. Another issue that has arisen since the establishment of the PCAOB is the increased compliance costs. In 2007, the PCAOB has been awarded a budget of 136,429,000 dollars by the SEC. Of that amount, 79,514,000 dollars will be used to pay for salaries. (The PCAOB) The PCAOB's budget is paid by public companies through fees and audit firms through fines. These fines can reach 100,000 dollars for individual auditors and up to 2 million dollars for audit firms. Many firms have increased their audit fees due to the increase in costs, partly due to the PCAOB. The PCAOB continues to grow each year. Their powers and responsibilities continue to grow, which in turn will lead to a larger budget. The SEC should take into consideration these additional fees for businesses and auditing firms when they determine the salaries of employees. The average salary for each employee is over 150,000 dollars, which is a substantial
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