Sarbanes-Oxley Act of 2002

Question 1

What are the primary duties of the PCAOB?

Answer 1

Register auditors who perform audits of public companies.
Write standards for performing audits of public companies.
Conduct period inspections of firms that audit public companies.
Investigate and punish violations of auditing standards.

Question 2

What specific provisions of S-Ox were intended to improve auditor independence?

Answer 2

Prohibits CPAs from performing certain non-audit services to public audit clients.
Requires that the supervising audit partner be rotated every five years.
Prohibits an accounting firm from auditing a company if the CEO, CFO or controller participated in the audit during the previous year.

Question 3

What have been the economic consequences of S-Ox?

Answer 3

Fewer initial public offerings in U.S.
Fewer foreign companies listing securities in U.S.
The U.S. stock market nearly doubled in value between October 2002 and October 2008.