PCAOB Responsibilities

Question 1

What does PCAOB stand for?

Answer 1

Public Company Accounting Oversight Board

Question 2

What are the 5 primary responsibilities of PCAOB?

Answer 2

1 Funding
2 Registration of public accounting firms
3 Inspections of registered public accounting firms
4 Enforcement
5 Standard setting

Question 3

Who is PCAOB Funded by?

Answer 3

1 registration and annual fees from public accounting firms

2 an annual accounting support fee assessed on issuers

Question 4

What does Registration of public accounting firms mean?

Answer 4

U.S. and non-U.S. accounting firms that prepare audit reports of any U.S. public company (issuer of securities) must register with the PCAOB

Question 5

What does Inspections of registered public accounting firms mean?

Answer 5

PCAOB is directed to conduct a continuous program of inspections that assess compliance with SOA, PCAOB rules, SEC rules, and applicable professional standards

Question 6

Firms that provide audit reports for at least 100 issuers must be Inspected how often?

Answer 6

Annually

Question 7

Firms that provide audit reports for fewer than 100 issuers must be Inspected how often?

Answer 7

Every three years (triennially)

Question 8

What does Standard Setting mean?

Answer 8

PCAOB is directed to establish auditing and related attestation, quality control, ethics and independence standards and rules to be used by registered public accounting firms in the preparation of audit reports for issuers

Question 9

What does Enforcement mean?

Answer 9

PCAOB has broad authority to investigate registered public accounting firms and persons associated with such firms

Question 10

What’s the purpose of the Sarbanes-Oxley Act of 2002,?

Answer 10

To address a series of perceived corporate misconduct and alleged audit failures (including Enron, Tyco, and WorldCom, among others) and to strengthen investor confidence in the integrity of the U.S. capital markets

Question 11

Overview of the Sarbanes-Oxley Act of 2002, what are the 4 Titles?

Answer 11

Title I gave standard-setting authority to the PCAOB
Title II Established independence requirements (limiting non-audit services, establishing a five-year rotation for the audit partner, one yr cooling off period)
Title III to make executives take responsibility for the accuracy of financial reporting
Title IV Addressed a variety of enhanced financial disclosures, the most well-known of which deals with required internal control reporting (Section 404), among other matters