Sarbanes Oxley Act and the PCAOB Essay - 1661 Words

The Sarbanes-Oxley Act Overview: The development of the Sarbanes-Oxley Act (SOX) was a result of public company scandals. The Enron and Worldcom scandals, for example, helped investor confidence in entities traded on the public markets weaken during 2001 and 2002. Congress was quick to respond to the political crisis and enacted the Sarbanes-Oxley Act of 2002, which was signed into law by President Bush on July 30 (Edward Jones, 1), to restore investor confidence. In reference to SOX, penalties would be issued to non-ethical or non-law-abiding public companies and their executives, directors, auditors, attorneys, and securities analysts (1). SOX significantly transformed the procedures in which public companies handle internal†¦show more content†¦Title I: Public Company Accounting Oversight Board: The PCAOB gives a new meaning to the public accounting industry. The board must be composed of five members, appointed for a 5-year term, two of which are Certified Public Accountants (CPAs) or have previou sly been CPAs, and three of which have never been CPAs. The chair of the PCAOB may be a CPA, but only if he has been out of practice for at least five years. The members must be independent of the accounting profession as no member may, concurrent with service on the board, share in any of the profits of, or receive payments from, a public accounting firm, other than fixed payment such as retirement payments (4). All members of the PCAOB must be appointed by the Securities and Exchange Commission (SEC). The board performs various jobs which include: oversee the audit of public companies, establish audit report standards and rules, inspect, investigate and enforce compliance on the part of registered public accounting firms and those associated with the firms (4). Not only do public accounting firms who audit the financial reports of public companies have to register with the PCAOB, but foreign public accounting firms must register as well. The standards of auditing include: A seven-year retention period for audits work papers, second partner review and approval, evaluation of whether internal control structure and procedures include records that accurately reflect transactions and dispositions ofShow MoreRelatedThe Implications of the Sarbanes Oxley Act on the Accounting Profession755 Words   |  4 PagesThe Implications of the Sarbanes Oxley Act on the Accounting Profession Abstract On July 30, 2002, the Sarbanes Oxley Act (also known as SOX) was signed into law by President George W. Bush. The Sarbanes Oxley Act of 2002 is a federal law that set new or improved standards for all U.S. public company boards, management and public accounting firms. Covered in the eleven titles are additional corporate board responsibilities, auditing requirements and criminal penalties. ThisRead MoreA Description of Auditing857 Words   |  4 Pagesfollowed by auditors. The Generally Accepted Auditing Standards apply to financial, operational, and compliance audits. Auditing public traded companies has been effected by the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board. Auditors have additional responsibilities because of the act and the PCAOB. Elements of GAAS The three elements of the Generally Accepted Auditing Standards are the general standards, standards field of work, and the standards of reporting. TheRead MoreThe Sarbanes Oxley Act Of 20021015 Words   |  5 PagesThe Sarbanes-Oxley Act of 2002, also known as the SOX Act, is enacted on July 30, 2002 by Congress as a result of some major accounting frauds such as Enron and WorldCom. 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The legislation created major regulations on company financial reporting andRead MoreSarbanes Oxley Act Of 20021635 Words   |  7 Pagesregulation named Sarbanes-Oxley Act of 2002 , also called â€Å"Public Company Accounting Reform and investor Protection Act† The main purpose of the act is to protect shareholders and general public from accounting errors and fraudulent practices in the enterprise, as well as improve the accuracy of corporate disclosures. (Mike Oxley 2002). Sarbanes-Oxley Act of 2002 is deemed to be one of the most virtual governance reforms and corporate disclosure in the United States history. This act made it possibleRead MorePublic Company Accounting Oversight Board; Will It Protect Investors?1157 Words   |  5 PagesBoard; Will it Protect Investors? The Public Company Accounting Oversight Board (PCAOB) was created by Sarbanes-Oxley Act of 2002. 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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