Public Company Accounting Oversight Board (PCAOB)

What Is the Public Company Accounting Oversight Board (PCAOB)?

The Public Company Accounting Oversight Board (PCAOB) is a non-benefit organization that regulates auditors of publicly traded companies. The purpose of PCAOB is to limit audit risk. Specifically, the PCAOB manages the audits of public companies, brokers, and dealers registered with the U.S. Securities and Exchange Commission (SEC)

Understanding the Public Company Accounting Oversight Board

The Public Company Accounting Oversight Board (PCAOB) was laid out with the entry of the Sarbanes-Oxley Act of 2002. The act was passed in response to different accounting outrages of the late 1990s. The board safeguards investors and different stakeholders of public companies by guaranteeing that the auditor of a company's financial statements has followed a set of severe rules.

The PCAOB is supervised by the Securities and Exchange Commission and, starting around 2010, the PCAOB has managed the audits of SEC-registered brokers and dealers.

PCAOB Advisory Groups

The PCAOB has two advisory groups: the Standing Advisory Group and the Investor Advisory Group. The job of these two groups is to give counsel and knowledge to the Board.

The Standing Advisory Group meets semi-annually to examine data and technology, cybersecurity, corporate culture, communications on PCAOB standards, the governance and leadership of quality control systems, current or emerging issues influencing audits or auditors, and implementation of the new auditor's report.

The Investor Advisory Group meets once per year to examine the group's strategic plan, quality control standards, implementation of the new auditor's report, and implementation of Form AP. The PCAOB Board has developed a five-step strategic plan, which is spread out in its annual report. The five-step plan is made out of the following:

• Drive improvement in the quality of audit services through a combination of prevention, detection, discouragement, and remediation.
• Expect and answer the evolving environment, including emerging advances and related risks and opportunities.
• Improve transparency and availability through proactive stakeholder engagement.
• Seek after operational greatness through efficient and effective utilization of our resources, information, and technology.
• Create, enable, and reward our kin to accomplish our shared objectives.

1,709

The number of PCAOB-registered firms in the United States starting around 2021, as per the PCAOB annual report.

The PCAOB Today

Firms that audit public companies, brokers, and dealers must register with the PCAOB. Registered firms are subject to inspection of the audits they have performed. PCAOB is associated with setting standards pointed toward working on the unwavering quality of audits and may likewise uphold standards by forcing punishments for infractions.

In 2020, PCAOB authorized 13 firms and 18 people coming about because of 219 audit inspections. In 2021, those numbers were 14 firms and 15 people authorized following 191 inspections.

Features

• The board safeguards investors and different stakeholders of public companies by guaranteeing that auditors follow severe rules.
• The Public Company Accounting Oversight Board (PCAOB) is a non-benefit organization that regulates audits of publicly traded companies to limit audit risk.
• The PCAOB was laid out simultaneously as the Sarbanes-Oxley Act of 2002 to address the accounting embarrassments of the late 1990s.