(1) register public accounting firms; (2) establish, or adopt, by rule, "auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports for issuers;" (3) conduct inspections of accounting firms
Financial Accounting Standards Board (FASB) and Public Company Accounting Oversight Board (PCAOB)
CPAs who do not audit the financial statements of publicly listed companies do not fall under the jurisdiction of the SEC and the PCAOB.
PCAOB
Seven Parts of a Standard Unqualified Audit ReportThe seven parts of a standard unqualified audit report are the title, addressee, introductory paragraph, scope paragraph, opinion paragraph, name of auditor (CPA firm), and date of report. Following is a description of the contents of each part.1. Title - Public company reports are required to begin with a title that references the "Independent Registered Public Accounting Firm". Reports for nonpublic companies may contain titles such as "Independent Auditors Report, or "Report of the Independent Auditor".2. Addressee - This is the individual, group, entity, board of directors, and/or stockholders who retained the services of the auditor. 3. Introductory Paragraph - This paragraph must state three things: "which financial statements are covered by the report, that the statements are the responsibility of management, and that the auditor has a responsibility to express an opinion" (Messier et al., 2006, p. 50). 4. Scope Paragraph - This paragraph states what is involved in the audit. For public companies the scope paragraph states that the audit was performed in accordance with Public Company Accounting Oversight Board (PCAOB) standards, and for nonpublic companies it states that the audit was performed in accordance with generally accepted auditing standards (GAAS). The scope paragraph must also state "that the audit provides only reasonable assurance that the financial statements contain no material misstatements,...that an audit involves an examination of evidence on a test basis,... 5. Opinion Paragraph - This paragraph expresses the auditor's opinion in regard to the fairness of the financial statements based upon evidence obtained through the audit.6. Name of Auditor - This is the name of the CPA firm that conducted the audit, along with a manual or printed signature of the auditor.7. Date of Report - This is "the date on which the auditor has completed all significant auditing procedures" (Messier et al., 2006, p. 52). Circumstances that Prevent Issuance of an Unqualified ReportThere are three specific circumstances that would prevent external auditors from issuing an unqualified report: scope limitation, departure from GAAP, and lack of independence of the auditor. Scope limitation results from the inability to gather adequate evidence. Departure from GAAP results from the fact that a departure from generally accepted accounting principles affects the financial statements. Lack of independence of the auditor refers to the fact that the auditor is not independent of the entity that he or she is auditing.
The SEC has delegated the oversight of external auditors to the newly created Public Company Accounting Oversight Board (PCAOB).
The PCAOB's headquarters are in Washington, D.C. Regional offices in 2005 were in eight locations: Atlanta, Chicago, Dallas, Denver, New York, Northern Virginia, Orange County (California), and San Francisco.
Financial Accounting Standards Board (FASB) and Public Company Accounting Oversight Board (PCAOB)
The PCAOB is a five-member board of financially literate members.
The PCAOB is a corporation that was established by Congress in order to audit various public companies. This protects the consumers of these companies.
Sarbanes-Oxley Act (SOX) of 2002. SOX transferred the regulation of accountants auditing the financial statements of public corporations from the AICPA to the Public Companies Accounting Oversight Board (PCAOB), a new private sector, not-for-profit body.
CPAs who do not audit the financial statements of publicly listed companies do not fall under the jurisdiction of the SEC and the PCAOB.
The most dramatic shift is that professional involvement of practitioners in rule making and monitoring is no longer provided. Earlier auditing standards that were issued by the AICPA's Auditing Standards Board, are now the responsibility of the PCAOB.
Michael Ramos has written: 'The auditor's guide to understanding PCAOB auditing standard no. 2' -- subject(s): Accounting, Auditing, Corporate governance, Corporations, Public Company Accounting Oversight Board, Rules and practice, Standards 'Polvoron' -- subject(s): Fiction, Social life and customs, Tales
As the explanation already states: The Sarbanes-Oxley Act's major provisions include the following: * Creation of the http://www.answers.com/topic/public-company-accounting-oversight-board (PCAOB) * A requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting, and that independent auditors for such companies "attest" (i.e., agree, or qualify) to such disclosure * Certification of http://www.answers.com/topic/financial-statements by http://www.answers.com/topic/chief-executive-officer and http://www.answers.com/topic/chief-financial-officer-1 This means publicly-traded companies. S-Corps are privately-held.
PCAOB
The board has the authority to establish auditing standards, quality control standards, and independence standards for audits of public companies.