PCAOB

The Public Company Accounting Oversight Board (PCAOB) is a United States nonprofit corporation established by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies and other issuers. Its mission is to protect investors by promoting informative, accurate, and independent audit reports and by improving audit quality through standard setting, inspections, and enforcement.

The PCAOB is governed by a five-member board appointed by the Securities and Exchange Commission (SEC) to five-year terms. Board members bring expertise in accounting, auditing, and corporate governance. The organization operates under SEC oversight and is funded by annual fees paid by registered public accounting firms and issuers.

Key activities of the PCAOB include setting auditing standards, quality control standards, and independence standards for audits of public companies and other designated issuers; registering public accounting firms that audit such entities; conducting inspections of registered firms to assess audit quality; and enforcing compliance through investigations and disciplinary actions when rules are violated. The PCAOB also issues guidance and reports to communicate issues and promote better practice.

Scope and impact: The PCAOB’s oversight covers audits of companies registered with the SEC and, in certain cases, related issuers and broker-dealers registered with the SEC. It operates in coordination with the SEC and Congress, and its standards and enforcement actions influence U.S. auditing practice, aiming to enhance the reliability of financial reporting and investor confidence.