The Public Company Accounting Oversight Board (PCAOB) is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. Its purpose is to “protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports”. Although a private entity, the PCAOB has many government-like regulatory functions, making it in some ways similar to the private “self-regulatory organizations” (SROs) which regulate stock markets, broker-dealers, etc. in the United States. In conversation, the PCAOB is often pronounced “peekaboo”.
The PCAOB has five members, including a chairman, each of whom is appointed by the US Securities and Exchange Commission (SEC). Precisely two members of the PCAOB must be or have been a Certified Public Accountant. However, if the chairman of the PCAOB is one of those two members, he or she may not have been a practicing certified public accountant for at least five years prior to being appointed to the Board. Each member serves full-time, for staggered five-year terms. The Board’s annual budget of approximately $180 million, which must be approved by the SEC each year, is funded by fees paid by U.S. securities issuers. The PCAOB has a staff of over 600, and its headquarters is in Washington D.C.
The PCAOB’s first chairman was the former New York Federal Reserve president, William J. McDonough. The Board’s immediate past Chairman is Mark W. Olson, a former Federal Reserve Board governor. The PCAOB’s current Chairman is James R. Doty.
The PCAOB has the power to:
- register public accounting firms that prepare audit reports for issuers;
- set auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports by issuers;
- conduct inspections of registered public accounting firms;
- conduct investigations and disciplinary proceedings concerning, and impose appropriate sanctions where justified upon, registered public accounting firms and associated persons of such firms (including fines of up to $100,000 against individual auditors, and $2 million against audit firms);
- perform such other duties or functions as the Board (or the SEC) determines are necessary or appropriate to promote high professional standards among, and improve the quality of audit services offered by, registered public accounting firms and their employees;
- sue and be sued, complain and defend, in its corporate name and through its own counsel, with the approval of the SEC, in any Federal, State or other court;
- conduct its operations, maintain offices, and exercise all of its rights and powers in any part of the United States, without regard to any qualification, licensing or other provision of State or municipal law;
- hire staff, accountants, attorneys and other agents as may be necessary or appropriate to the PCAOB’s mission (with salaries set at a level comparable to private sector self-regulatory, accounting, technical, supervisory, or other staff or management positions);
- allocate, assess, and collect accounting support fees that fund the board; and
- enter into contracts, execute instruments, incur liabilities, and do any and all other acts and things necessary, appropriate, or incidental to the conduct of its operations and the exercise of its powers under the Sarbanes-Oxley Act.
Soreide Law Group represents CPA’s in front of the Florida Board of Accountancy (BOA) regarding any licensing issues. For more information about professional licensing law please call to speak with an attorney at: (888) 760-6552.