Public Company Accounting Oversight Board

Definition

The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by Congress to oversee the audits of public companies to protect investors. It ensures that audit reports are informative and accurate, thereby enhancing public trust in financial reporting.

5 Must Know Facts For Your Next Test

1. The PCAOB was created by the Sarbanes-Oxley Act of 2002.
2. It has authority to set auditing standards for public company audits.
3. The PCAOB conducts inspections of registered accounting firms.
4. It can impose disciplinary actions on auditors and firms for non-compliance.
5. The PCAOB is overseen by the Securities and Exchange Commission (SEC).

Review Questions

• What legislation led to the creation of the PCAOB?
• Who oversees the PCAOB?
• What are two primary functions of the PCAOB?

Related terms

Sarbanes-Oxley Act:

A U.S. federal law passed in 2002 aimed at protecting investors from fraudulent financial reporting by corporations.

Securities and Exchange Commission (SEC):

A U.S. government agency responsible for enforcing federal securities laws and regulating the securities industry.

Auditing Standards: Guidelines issued by governing bodies like the PCAOB that auditors must follow when conducting audits of financial statements.