PCAOB: Overview and Benefits of Public Company Accounting Oversight Board
The Public Company Accounting Oversight Board (PCAOB) is an independent nonprofit organization that was created by the Sarbanes-Oxley Act of 2002. The PCAOB was established to protect investors in public companies by promoting high quality audits through oversight of auditors and the audit process. It does this by setting auditing standards, inspecting registered accounting firms, investigating violators, and enforcing compliance with its rules.
Benefits of PCAOB Regulation
The benefits of having a PCAOB regulated system include increased corporate transparency; improved accuracy and reliability in financial reporting; protection against fraudulent auditing activities; increased investor confidence; higher quality audits from certified independent accountants who are more accountable for their work product; enhanced auditor independence from management influence or pressure; better alignment between business performance measurements as reported to shareholders and actual results achieved by the company. Additionally, it helps create a level playing field among all publicly traded companies since they must adhere to similar standards when filing reports with the Securities Exchange Commission (SEC). In essence, it creates trustworthiness amongst stakeholders including investors, creditors, customers and employees alike.
Overall, these benefits contribute towards a well-functioning capital market which encourages long-term investments while simultaneously providing accurate information about publicly traded companies so that informed decisions can be made on behalf of all stakeholders involved.
