Public Company Accounting Oversight Board ( PCAOB ) is a non-profit-making corporation established by Congress to supervise the audits of public companies in order to protect investors and the public involvement by advancing enlightening, accurate, and independent audit studies ( Messier ) .Another regular work that PCAOB registries is that the audits of agents and traders, including conformity studies filed pursuant to federal securities Torahs, to advance investor protection since 2010 ( Messier ) .
Now PCAOB is responsible for a plan of regular review of buttocks the grade of conformity of registered public accounting houses with SOX, PCAOB and SEC regulations, and professional criterions. The PCAOB besides has wide investigative and disciplinary authorization over registered audit houses.PCAOB is created by the Sarbanes-Oxley Act of 2002 to forestall the instances like Enron go oning once more. Enron instance was a hit to the US accounting field at that clip and it was besides a cautiousness to demo the importance of scrutinizing work.
PCAOB was set in that state of affairs with five official members from 25 October 2002, including 2 CPAs. Founding board members are appointed to reel footings including: Kayla J. Gillan, Daniel L. Goelzer, Bill Gradison, and Charles D.
Niemeier. James R. Doty has been the president since 2011, and Lewis H. Ferguson, Jeanette M.
Franzel, Jay D. Hanson and Steven B. Harris are the rest board members. All members in PCAOB are full-time employers with similar salary degree as FASB employers.
The first PCAOB office was opened at Washington. Then in Atlanta, Chicago, Denver, New York and other four metropoliss, offices are established brick by brick. By 13 November, 2013, there were 2,363 public accounting houses registered with the PCAOB, and 911of them are outside the United States ( Annual Report 2013 ) . PCAOB is going more international and is regarded as credited criterions all planetary through these 12 old ages.
Though PCAOB is a non-profit-making organisation, outgos are needed to keep day-to-day operations. The financess are collected to cover PCAOB’s one-year budget, less enrollment and one-year fees, and other operational supplies. The beginnings of support for the PCAOB are varied, but the largest beginning comes from the companies whose fiscal statements are needed audited by the PCAOB’s registered auditing houses.However, the financess from the issuers’ , brokers’ and dealers’ using fee are non plenty for the one-year budget and officials’ wages ; they are merely defined as the Board ‘s “ accounting support fee.
” The Board ‘s budget and accounting support fee are approved yearly by the SEC ( official web site ) . In 2011, the new amendments came out from SEC to redefined the allotments of “accounting support fee” paid by issuers, agents and traders.The new amendments are guided with two discriminatory rules. One is that the fee must be allocated in a mode that reflects the proportionate sizes of issuers, agents, and traders.
The other one refer that the fee must be allocated in an just mode. The ground why these rules made is that audit work load is based on the entity size to some grade. Through the 2014 fiscal-year budget, it is said the entire spendings are 258,414,485, a 5 per centum addition over this past twelvemonth ( Cohn ).Harmonizing the budget statements, the Division of Registration and Inspections portion the largest portion of budget and Division of Enforcement and Investigations, Office of Information Technology, Office of Administration occupy big portions every bit good.
As the organisation to supervise the audits of public companies, PCAOB’s fiscal statements can be unfastened to the populace to demo dependability and convert the populace. PCAOB will besides show an one-year study each twelvemonth to demo their fiscal statements, statements of activities and puting lists.Accounting rules and criterions can be revised each twelvemonth and PCAOB should set its schemes tied to the current state of affairs. Every twelvemonth, PCAOB will hold a strategic program which contains the freshly updated ends for the following five twelvemonth.
In PCAOB’s latest strategic program ( 2013-2017 ) , PCAOB continued to polish their schemes and reexamine the attack to the developments and fortunes that affect their plans, operations, and resource demands. Core value, missions and liabilities are ever similar from twelvemonth by twelvemonth but SWOT analysis is needed to show before PCAOB set their new ends.There are no absolute strengths or failings for one organisation, and chances this twelvemonth may be the menaces in the hereafter ; so updated SWOT analysis is necessary. In PCAOB’s 2013-2017 strategic program, the organisation keeps its independency and institutional credibleness as their chief strength.
PCAOB besides has a batch of experient and knowing hearers who register on the board to work with. PCAOB is besides an establishment authorized by the authorities and has shutting work relation with other important organisation including SEC, FASB, and FINRA ( Financial Industry Regulatory Authority ).The largest failing PCAOB faced in these old ages is that it does non hold public nature of the Board ‘s disciplinary procedure under the Sarbanes-Oxley Act. Under the current state of affairs, market has large involvement in PCAOB information and the PCAOB ‘s possible to heighten competition on the footing of audit quality.
PCAOB besides regards their planetary web as their chance to derive more sophisticated information, information for analysis. PCAOB besides envisages the possible menaces though they are in the roar period now. PCAOB should engage and retain their experient and knowing hearers in this competitory market.In my sentiment, missing of registered houses outside the U.
S is besides a barrier for PCAOB becomes more international. Though the absolute figure of houses is big plenty now, over 60 % of those houses are U.S companies. I think this menace will be for long clip because the accounting rules and criterions are really different in different states.
In the United State, Generally Accepted Accounting Principles ( GAAP ) is followed in all houses but International Accounting Standards ( IAS ) and International Financial Reporting Standards ( IFRS ) are more acceptable in some other states like China.On the current globalisation state of affairs, more and more big houses are transnational and it is a heavy work load and it is impossible for PCAOB to scrutinize those houses utilizing different criterions. My suggestion is that PCAOB may join forces more with other national scrutinizing organisation. In this manner, PCAOB may intrust those organisations to make some international audit instance and those work should be creditable as good.
Based on the SWOT analysis, PCAOB set up three ends for the 2013-2017 period. The first end is to effectual usage of the alone cognition and penetration into audit patterns, hazards, and tendencies to plan and implement the most effectual audit inadvertence plans and regulative activities that will farther investor protection and the public involvement in enlightening, accurate and independent audit studies ( 2013-2017 Strategic Plan ) . There was a study PCAOB made in the terminal of 2013 said that registered houses did non ever ensue in “an suitably executed engagement quality review” although they are followed the AS 7 criterions ( Cohn ) .PCAOB decides to better transparence into the audit procedure to assist better this state of affairs and reduces the audit hazards.
Meanwhile, to understand the root causes of audit hazards and respond to the known or possible tendencies in audit hazards, the organisation will utilize the comparative analysis more frequently in houses ‘ policies for internal reviews. PCAOB has besides been doing procedure on cut downing its backlog of redress entries since 2013 ( Staff ) . These entries can day of the month back to 2010 and they are submitted to SEC in early January.The 2nd end for the hereafter five twelvemonth is to do a positive difference in the market for audit services and progress tendencies for choice fiscal coverage.
PCAOB pays a great attending to accounting firms’ burgeoning consulting patterns ( Cohn ) . This aim will be so of import in the current twelvemonth that there is a big portion of 2014 budget goes to the object. Bettering instruction related to scrutinize quality is another aim in the program. This action can be used by CPA houses, go oning instruction suppliers, and college audit professors in order to better preparation and educational plans, with the end of avoiding similar misdemeanors in the hereafter ( Coppage 46 ) .
As for bettering the relevancy and utility of the audit study for the puting populace, PCAOB plans to seek penetration alterations to scrutinize study through research and economic analysis and follow criterions and regulations. The 3rd end is to set up a harmonious workplace civilization that promotes excellence, unity, diverseness, regard, equity, answerability, uninterrupted acquisition and careful stewardship of the resources in executing of their mission ( 2013-2017 Strategic Plan ) .I appreciate PCAOB’s manner to do their strategic program. A five-year period is non a short term for an organisation which merely has twelve-year history so the strategic program can see as a long-run program for PCAOB.
However, every twelvemonth, the organisation makes accommodations for updated state of affairss to accommodate the newest accounting rules. In the program, ends are set accurate and sensible, and aims are all-around.For my ain cognition, I suggest PCAOB to construct more elaborate criterions about the computing machine auditing because the computing machine engineerings are loosely used in accounting presents. Computer frauds may go on besides the traditional cheating in the fiscal studies.
Developing new and elaborate criterions of computing machine scrutinizing will do PCAOB’s work more accurate and creditable.In drumhead, PCAOB does a good occupation as a immature scrutinizing supervisory organisation. Though PCAOB was created merely decennary old ages ago, it has specific model of the organisation and elaborate budgets for every-year’s operations. PCAOB besides suits the invariably altering accounting rules and criterions in order to advance the better auditing work.
Its programs are draw a bead oning, realizable and elaborate. I think PCAOB has a fantastic strategic program to run into the hereafter challenges in the undermentioned old ages.Work CitedCohn, Michael. “ CAQ Points to Risks in 2013 Audit Cycle.
” Accounting Today ( USA ) 17 Dec. 2013, Newswire: NewsBank. Web. 5 Feb.
2014.Cohn, Michael. “ PCAOB to Concentrate on Accounting Firms’ Turning Consulting Businesses. ” Accounting Today ( USA ) 26 Nov.
2013, Newswire: NewsBank. Web. 5 Feb. 2014.
Coppage, Richard, and Trimbak Shastri. “ Using PCAOB Settled Disciplinary Orders To Better Audit Quality Education. ” CPA Journal 83.7 ( 2013 ) : 46-51.
Business Source Premier. Web. 17 Feb. 2014.
Messier, Glover ; A ; Prawitt, Auditing and Assurance Services, McGraw-Hill Irwin Publishing, 8th edition. Print.Staff, Editorial. “ profession ticker.
” Accounting Today ( USA ) 1 Feb. 2014, profession ticker: 6. NewsBank. Web.
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