The Board Public Company Accounting Oversight is a nonprofit organization created by the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley, the Congress legislation to limit the accounting irregularities and inaccuracies of listed companies. The Securities and Exchange Commission of the United States is the federal agency responsible for the supervision of the Public Company Accounting Oversight Board. The PCAOB is governed by five members of the board appointed by the SEC for a term of five years in collaboration with the Board of Governors of the Federal Reserve and the US Treasury Secretary.
The first mission of the Public Company Accounting Oversight Board is to analyze the relationship between accounting firms and their clients. In a review of the accounting scandals of 2001, federal regulators determined that companies like Enron, WorldCom and Sunbeam had inappropriate relationships with their auditors and firms of accountants. As public accounting firms were offering consulting and auditing services to these companies, auditors have not shown an independent relationship to assess the accuracy and validity of each company to have accounting information. Congress created the Public Company Accounting Oversight Board control practices to improve public companies and ensure that investors and other stakeholders are protected against hardware errors or inaccuracies in the information in company accounts.
Although it is a non-profit private organization, the Public Company Accounting Oversight Board has an extreme regulatory capacity in the field of public accounting firms. It is the main overseer of SOX and how companies implement SOX accounting principles required in their operations. The PCAOB receives funds from public companies that are required under the SOX legislation be verified. public accounting firms auditing planning for listed companies must also register with the Public Company Accounting Oversight Board and offer a good salary compensation to stay with the office of the regulations.
The Public Company Accounting Oversight Board has no authority to make or require listed companies to implement new accounting rules. PCAOB currently uses a permanent advisory group of large US accounting bodies to help develop the new rules and accounting principles PCAOB. Current status of the PCAOB advisory group includes the Auditing Standards Board of the American Institute of Certified Public Accountants, the Ministry of Labour, the Financial Accounting Standards Board, the Government Accountability Office, the International Auditing and Assurance Standards Board and SEC . This standing advisory group to help advise the Public Company Accounting Oversight Board accounting practices and existing or new audit that can improve the financial reporting of listed companies.