The Public Company Accounting Oversight Board (PCAOB) was formed under Title I of SOX. According to authors Johnstone, Gramling, and Rittenberg, Section 101 presents the PCAOB as auditing standard setters and regulators of the audits of corporations by public accounting firms. Section 102 mandates that the accounting firms auditing public companies register with the PCAOB. Section103 require audit firms to describe the scope of testing of issuers’ internal control structure. The authors further enlighten in Section 104 that the PCAOB will conduct inspections— either annually or every three years (for firms that audit fewer than 100 issuers) of registered public accounting firms and publicly report the results of these inspections. Section105
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Commencing with the users of the financial statements, the corresponding sections of Title I of Sox can be presumed to be entirely in their favor. Title1established an additional authoritative body to endorse the execution of quality audits. Moreover, users are reassured that the auditors’ work is up to par through the PCAOB’s frequent investigations. Indisputably, however, more rebuffs than advantages subsist with Title I of SOX for corporations and their auditors. While Title I of SOX ensures corporations that their audits are conducted in a quality manner—hence, perchance evading any future impediments— Title I may not be cost effective; this benefit may not outweigh the costs of funding the PCAOB’s operations. This evaluation pertains too to the auditing firms. While the firms will be better informed if their auditors are performing proper audits in accordance with the stipulated auditing standards as well as whether their auditors are utilizing suitable tests of a corporation’s internal controls, the costs of satisfying all the provisions of Title I may be exorbitant. Furthermore, the firms will be under relentless scrutiny, thus potentially creating hostile work environments with the possibly of severe punitive consequences if blunders or deceptions are committed or if they do not aid in investigations. Lastly, satisfying all the provisions of Title I may trigger deferment of an …show more content…
This section pertains to the CEO and CFO of a corporation who more likely than not are licensed Certified Public Accountants. According to authors Johnstone, Gramling, and Rittenberg, Section 302 conveys the concept of corporate responsibility by requiring these signing officers to certify that the reports filed with the SEC are free from any untrue statements of material facts, and that the financial statements and disclosures present fairly (in all material respects) the financial condition and results of operations of the corporation. Furthermore, the authors explain that the signing officers must establish and maintain effective internal controls to ensure reliable financial statements and disclosures, disclosing any material deficiencies in controls to the audit committee and to the auditors. While this is but another reassure to external user of the financial statements that such statements are reasonable accurate, this is yet another heavy responsibility for those in the accounting profession. Although this provision has no cost implications, the officers must exert more time and resources to assure that no misstatements exist because their name is now on the
Commencing with the users of the financial statements, the corresponding sections of Title I of Sox can be presumed to be entirely in their favor. Title1established an additional authoritative body to endorse the execution of quality audits. Moreover, users are reassured that the auditors’ work is up to par through the PCAOB’s frequent investigations. Indisputably, however, more rebuffs than advantages subsist with Title I of SOX for corporations and their auditors. While Title I of SOX ensures corporations that their audits are conducted in a quality manner—hence, perchance evading any future impediments— Title I may not be cost effective; this benefit may not outweigh the costs of funding the PCAOB’s operations. This evaluation pertains too to the auditing firms. While the firms will be better informed if their auditors are performing proper audits in accordance with the stipulated auditing standards as well as whether their auditors are utilizing suitable tests of a corporation’s internal controls, the costs of satisfying all the provisions of Title I may be exorbitant. Furthermore, the firms will be under relentless scrutiny, thus potentially creating hostile work environments with the possibly of severe punitive consequences if blunders or deceptions are committed or if they do not aid in investigations. Lastly, satisfying all the provisions of Title I may trigger deferment of an …show more content…
This section pertains to the CEO and CFO of a corporation who more likely than not are licensed Certified Public Accountants. According to authors Johnstone, Gramling, and Rittenberg, Section 302 conveys the concept of corporate responsibility by requiring these signing officers to certify that the reports filed with the SEC are free from any untrue statements of material facts, and that the financial statements and disclosures present fairly (in all material respects) the financial condition and results of operations of the corporation. Furthermore, the authors explain that the signing officers must establish and maintain effective internal controls to ensure reliable financial statements and disclosures, disclosing any material deficiencies in controls to the audit committee and to the auditors. While this is but another reassure to external user of the financial statements that such statements are reasonable accurate, this is yet another heavy responsibility for those in the accounting profession. Although this provision has no cost implications, the officers must exert more time and resources to assure that no misstatements exist because their name is now on the