A nonprofit corporation established by Congress as Title I under the respective bill, the PCAOB is composed of five board members, all of whom are appointed by the SEC and serve staggered five year terms on a full-time basis. These five board members include two certified public accountants (CPAs) and a chairman whom cannot be a practicing CPA in the next five years of the serving term. The four main functions of the PCAOB in overseeing these auditors consist of the following: registration, inspection, enforcement and setting standards. The PCAOB has the authority to register accounting firms which conduct audit reports for issuers, brokers, and dealers. Even accounting firms not located in the United States but still provide audit services for any U.S-based issuer, broker, or dealer are also subject to rules set by the PCAOB. In turn, quality control, audit, and ethical practices are imposed among the registered …show more content…
As a matter of fact, both the chief executive officer (CEO) and chief financial officer (CFO) of a public company are primarily responsible for the accuracy, documentation and submission of all financial reports along with establishing and maintaining the firm’s internal controls. The CEO and CFO are also required to certify the company’s quarterly and annual financial statements and evaluate the effectiveness of the company’s disclosure controls and procedures. According to the new “Exchange Act”, an update to the Securities and Exchange Act of 1934, these “disclosure controls and procedures” are defined as controls and procedures of the issuer ensuring that the information required to be disclosed by the issuer in the reports filed or submitted is recorded, processed, summarized and reported within the time periods specified in the SEC rules. Also, the same information disclosed shall be accumulated and communicated to the issuer’s management, including its CEO and CFO, in order to allow timely decisions relating to the required disclosures. While there is no specific system that is to be implemented according to the rules of the SEC, it’s up to management of a company to decide which procedures and controls are most appropriate, given the firm’s structure, size, capabilities, etc. Since then a number of private sector providers have