...With the complexity of accounting today there is a need for someone to oversee the auditors and the publicly help companies. The auditors must prove their independence when attesting to the financial statements of publicly held companies. The public companies must be honest and open when they file their financial statements. In recent years there have been auditors who were bias towards some companies and also companies have not been disclosing all the facts about their financial position. These problems are the reasons why there is a need for an overseeing, unbiased board of professionals. The board can help stop most of the problems with auditing and filing of financial statements. The board can do so by establishing and enforcing rules and standards for public companies and auditors. The two recent boards that have attempted to solve the problems are the Independence Standards Board and the Public Company Accounting Oversight Board. The Independence Standards Board was established in May of 1997 as a result of discussions between the American Institute of Certified Public Accountants and the U.S. Securities and Exchange Commission. The biggest issue was the integrity of the financial statements of public companies. In order to have confidence and credibility of the financial statements the auditors must be independent of the public companies. “The operating policies of the Independence Standards Board are designed to permit timely, thorough, and open study of issue involving...
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...Accounting Regulatory Bodies There are many different types of regulatory bodies to regulate financial accounting and financial reporting. These types of regulators help make financial reports and accounting easier to read and understand. End users to these reports include investors, lenders, etc. The Public Company Accounting Oversight Board (PCAOB) was created to oversee the auditors of public companies to protect the interests of investors and further interest in the preparation of informative, fair, and independent audit reports (Public Company Accounting Oversight Board, 2008). There are standards adopted by the PCAOB and some of these standards are: referencing PCAOB in auditors’ reports, an audit of internal control over financial reporting performed in conjunction with an audit of financial statements, providing audit documentation, reporting if a previously reported material still exists, and compliance with auditing and related professional practice standards (Public Company Accounting Oversight Board, 2008) The Governmental Accounting Standards Board (GASB) is a not-for-profit organization that establishes and improves standards of financial accounting and reporting for state and local governments in the U.S. (Governmental Accounting Standards Board, 2008). Their standards include: useful financial reports, reliable, relevant, and consistent information, unique and distinguishing characteristics of the governmental environment, and improve understanding...
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...financial statements is required primarily for the protection of public investors, should not all PCAOB members be taken from the investment community that uses audited financial statements? •What regulatory compliance requirements apply to various business situations? The Public Company Accounting Oversight Board (PCAOB) is a private-sector, nonprofit corporation created by the Sarbanes–Oxley Act of 2002 to oversee the audits of public companies and other issuers in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. Since 2010, the PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection. All PCAOB rules and standards must be approved by the U.S. Securities and Exchange Commission (SEC). Commentators occasionally suggest that the Public Company Accounting Oversight Board is mis-named. Some urge that the word “accounting” should be dropped from the Board’s name -- since the Board has jurisdiction over auditing, not over accounting principles. Others argue that the words “public company” don’t really belong, since the Board doesn’t oversee public companies. I have even heard it suggested that our largest impact will be on auditing standards, and that the word “standards” should be added in place of “public company accounting”. “SOB” would certainly be a catchier acronym than PCAOB...
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...mentioned in this paper is a brief discussion about “The Public Company Accounting and Investor Protection Act of 2002” and its impact on public businesses as well as the investors thereof. A Discussion about the NYSE and NASDAQ NASDAQ and the NYSE are both popular in the sector of trading. NASDAQ represents National Association of Securities Dealers Automated Quotation and NYSE stands for the New York Stock Exchange. As I researched the NYSE and NASDAQ, I was only able to locate a few similarities between the two companies. The first similarity is that both NASDAQ and NYSE are companies that participate in the business of stock exchanging. The second similarity that both NASDAQ and the NYSE share is that they both match the necessity for stock supply and demand. The third similarity between NASDAQ and NYSE is that they both hold most of the equity that is traded in the US. That is made possible, in that, most of the trading that occur in the US takes place by either NASDAQ or the NYSE. The fourth similarity is that both companies offer high-end services for trading. While there are a few similarities between NASDAQ and the NYSE there are definite differences between the two. One difference is that NASDAQ is commonly recognized as the high-tech company because the company mainly deals with electronics and technology whereas the NYSE is affiliated with the larger industries made up of older well established companies. Another difference between NASDAQ and the NYSE is...
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...corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession. (Securities Exchange Commission, 2014) Over the years, there have been multiple fraud cases involving businesses’ accounting practices. Some of the motives range from misleading potential investors about the company’s earning to attract more investors and get more funding from banks to corporate executives taking a little more cash home in salaries, plus avoiding taxes to increase profits. The SEC was created to enforce statutes such as the Sarbanes-Oxley Act and others to try to prevent the massive amount of fraud that has been on the rise. Even after all these measures have been put forward, more than half of U.S. organizations that experienced fraud in the past two years reported an increase in the number of occurrences, according to a new survey by PricewaterhouseCoopers that also found a rise in accounting fraud, bribery and corruption, with cybercrime moving to the forefront of U.S. companies’ concerns. (Cohn, 2014) One of the biggest reasons for the rise is political organizations who claim to support smaller government and lower taxes usually lobby, force their way into American government, and muddy the waters when new legislation is passed to benefit the corporations that fund them. Following the Enron scandal in 2001, one addition that occurred from the SOX act was an accounting oversight board labeled...
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...many companies that will hide the truth about their company. The business owners participate in this activity because they want some information about the business to be private. The business owners want their information to be private because the business owners do not want the secrets of the company to revealed. However, when it’s time for that business to get audit, the business owner felt as if they did not have enough protection in maintaining the privacy of the business. In retaliation to this, the “Public Company Accounting Oversight Board,” also known as PCAOB was created. In 2002, the congress created PCAOB in an attempt to protect the business. The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed in connection with federal securities laws which promotes investor protection. Background of PCAOB Congress created the PCAOB in the wake of Enron, WorldCom, Tyco, and a series of other financial reporting scandals that rocked the securities markets and shook investor confidence. The birth of the Board signaled the end of voluntary self-regulation of the auditing profession and the beginning of compulsory, independent oversight. The Sarbanes-Oxley Act charges the Board with overseeing the audits of public companies...
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...Sarbanes-Oxley Act (SOX) which was made based on the public business outrages. The WorldCom and The Enron issues, for instance, gave shareholders self-confidence in entities traded on the open markets throughout ’01 and ’02. Congress was very fast to answer to the political disaster and made the bill of the Sarbanes-Oxley Act of 2002, which eventually the bill was signed into edict by President Bush on July 30 to give self-assurance to shareholders (Carmichael, 2004). SOX quickly changed the way in how public business takes internal controls and reporting within accounting and finance and the way the public companies business being administered. One of the most important objectives of SOX is to oversee public accounting, publicity reporting business and the investment commerce. In order to follow SOX objectives and to watch the acts of public accountancy, SOX created the Public Company Accounting Oversight Board (PCAOB). This particular board directs the accounting line of work and publicity reporting business with respect to reporting and audits (Mallor, Barnes, Bowers, & Langvardt, 2014). The Public Company Accounting Oversight Board (PCAOB) members are enforced not to have any associations with the public companies or members of the companies so as to keep all terms of accountability fair and clear. PCAOB also generated rules made to guarantee that auditors of publicity reporting business are autonomous of the companies on which they report (Carmichael, 2004). Do you...
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...the 1998 Should auditors insist that their clients accept all proposed audit adjustment, even those that have an “immaterial” effect on the given financial statements? According to section 312.10 of the PCAOB standards, “the auditor’s consideration of materiality is a matter of professional judgment and is influenced by his or her perception of the needs of a reasonable person who will rely on the financial statements” (Public Company Accounting Oversight Board, 2011). This statement suggests that there are no hard and fast rules with regards to the determination of whether an adjustment is material or immaterial. In my opinion, much of the decisions are left to the auditor’s interpretation of the rule. Given all the rules and standards that both auditors and corporations must abide by, it would be wise to accept the proposed audit adjustments. Whether they are “material” or “immaterial” should not matter, because the fact that the auditor finds it necessary to propose the adjustment must be based on a rule or interpretation of a rule. If the company is secure in the abilities of its chosen auditor, they should allow the auditor to do his job. On the other hand, the auditor is supposed to accept engagements that he is confident that he can handle, and if, in his evaluation, and adjusting entry is advisable, he must have come to that conclusion based on a particular rule and law, and the auditor’s proposals should...
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...“Codification” means the FASB Accounting Standards Codification electronic research system developed and released by the FASB which houses, reorganizes and indexes United States financial accounting standards and related literature (FASB Accounting Standards Codification®). The codification can basically be referred to as a one stop complete authorized source of reference for GAAP framework in order to adhere to the requirements of fair financial reporting by non-governmental entities. The codification comprises of authoritative standards from FASB, AIPCA and others and it does not involve any changes to the actual standards and is applicable to both public and private companies. The FASB had three primary goals in developing the Codification: first to simplify user access by codifying all authoritative US GAAP in one spot; second to ensure that the codified content accurately represented authoritative US GAAP as of July 1, 2009, and third to create a codification research system that is up to date for the released results of standard-setting activity. Basically the reasons behind the codification was to gather all US GAAP standards and make it easier for any individual to search for guidance in one place by using keywords or by narrowing the search by categories. Additionally, it eliminated the redundancy of statements among different standards and with just one source it allows the user to cite the relevant code with up to date standards. For instance, to find out the disclosure...
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...body is the Securities Exchange commission (SEC). The SEC main goal is to observe public companies to ensure these public companies are following the generally accepted accounting principles when reporting their company’s financial data. The administration and finances of several regulatory boards and councils such as the financial accounting standards board, the financial accounting standards advisory council, governmental accounting standards advisory council, and the governmental accounting standards board is the responsibility of Financial Accounting Foundation (FAF) (Weygandt, Kimmel, & Kieso, 2008). The Financial Accounting Standards Board (GASB) main purpose is the developing, enforcing the standards in accounting and reporting for all non-governmental entities. The formulation of Governmental Accounting Standards Board (GASB) was because of the need for all government levels to have standard accounting principles. The GASB created and implemented the generally accepted accounting principles. This board mirrored the financial accounting standard board on state and local levels. The Federal Accounting Standards Advisory Board (FASAB) is a regulatory body whose main purpose is to distribute the federal accounting standards to all users of federal financial information. The formulation of the International Accounting Standards Board (IASB) created international accounting standards through a joint effort with representative from other countries to ensure...
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...2002. The Public Company Accounting Reform and Protection Act of 2002 is also used to refer to this law. Numerous acts of corruption in the business sector continued throughout the late 1990s as well as early part of 2000 with no laws to prevent it. In response to the very public case of WorldCom and Enron fiscal scams, the Sarbanes-Oxley Act of 2002 (commonly called SOX) was passed to protect the public and investors from unfair practices and accounting mistakes (Rouse, 2007). In order to safeguard shareholders, the president at that time President George Bush pushed for the act to get passed by the Senate and House of Representatives. The law was immediately signed by the president after the law passed the Senate 99-0 and the House of Representative 423-3 (Bumgardner, 2003). Since the law passed, it has been viewed as the best measure since the Security and Exchange Law of 1934 to improve business accounting rules. This law deters businesses from deceiving their shareholders and stockholders and from deliberately committing fiscal scams. Companies must respond accordingly and administer corporate governing plans to prevent bogus activities. The Securities and Exchange Commission administers the Sarbanes-Oxley Law and outlines how organization records must be maintained and for how long those records need to be maintained. The law enhances safety by improving reliability and accuracy of company financial statements and reports provided to shareholders in public organizations...
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...Crossing, Arthur Andersen and WorldCom to protect shareholders and the public from accounting errors and unethical business practices. It brought major changes to the regulation of financial practice and corporate governance. The Act covers issues related to creating a public company accounting oversight board, auditor independence, corporate responsibility and improved financial disclosure. The Act states that all business records, even electronic records and electronic messages, must be saved for nearly five years and not less. The results for non-compliance could be fines, imprisonment, or both. For both large and small organizations the Act is mandatory, so also compliance, for the Act emphasizes on information transparency and accountability. Senator Paul Sarbanes and Representative Michael Oxley are the main architects, thus the name. The Act is organized into eleven titles and sections 302, 404, 401, 409, 802 and 906 are the most significant with respect to compliance and section 404 seen is most of important for internal control; the laws deal on corporate board responsibilities to criminal penalties. The Security and Exchange Commission (SEC) is required to implement rulings on requirements to comply with the Act. The section 404 is cause of concern within corporate audit committees and internal audit departments, largely due to deadlines for compliance as the Act is new. Some companies have yet completed a Section 404 assessment of internal control. Internal...
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...com/product-category/acc-375/ Contact us at: nerdypupil@gmail.com ACC 375 WEEK 2 DISCUSSION QUESTION 1 Explain the differences among the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB). Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 375 Week 2 Discussion Question 1 in order to ace their studies. ACC 375 WEEK 2 DISCUSSION QUESTION 1 To purchase this visit here: http://www.nerdypupil.com/product-category/acc-375/ Contact us at: nerdypupil@gmail.com ACC 375 WEEK 2 DISCUSSION QUESTION 1 Explain the differences among the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB). Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 375 Week 2 Discussion Question 1 in order to ace their studies. ACC 375 WEEK 2 DISCUSSION QUESTION 1 To purchase this visit here: http://www.nerdypupil.com/product-category/acc-375/ Contact us at: nerdypupil@gmail.com ACC 375 WEEK 2 DISCUSSION QUESTION 1 Explain the differences among the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB). Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 375 Week 2 Discussion Question 1 in order to...
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...CAPSTONE CASE STUDY ON ORGANIZATIONAL ARCHITECTURE: ARTHUR ANDERSEN LLP 1. Discuss the environmental, strategic and organizational changes that occurred over the life of Andersen in the context of Figure 11.1. Architectural design of firm may vary among companies. There are most common categories are business environment, strategy, and organizational architecture. Business environment of Andersen includes technology that was used effectively; structure of its markets, regulations which helped Andersen to grow along with its reputation. The second category is strategy which includes Andersen’s primary goals, choice of business, and services. Finally, the last category is organizational architecture which explains how authority is distributed among Andersen’s employees, and how rewards determined. BUSINESS ENVIRONMENT TECHNOLOGY | MARKETS | REGULATIONS | Company started using computers for bookkeeping.Company developed the largest technology practice. | Arthur Andersen was well respected, reputable auditing company for many customers.Early 1950s Andersen entered in computer consulting business. | The federal law in 1930’s which required companies to provide their financial statements to an independent auditor each year helped Andersen’s grow. | STRATEGY Quality audits were valued more than higher short-run firm profits.“Four cornerstones” of good service, quality audits, well managed staff and profits.Auditors were rewarded and promoted for making sound audit...
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...ACCOUNTING STANDARDS AND REGULATIONS ACCOUNTING STANDARDS & REGULATIONS During the year 2002, the accounting profession was subjected to a series of highly publicized scandals. For example, it was discovered that the prestigious Arthur Andersen firm had played a role in the fraudulent reporting practices that led to the bankruptcy of the Enron Corporation. Andersen accountants had helped the company hide its losses, and had shredded important documents that were relevant to the case. In June 2002, Andersen was found guilty of obstructing justice, was fined $500,000, and was sentenced to five years probation (Sachdev, n. p.). Also during 2002, the telecommunications firm WorldCom was found guilty of fraud as a result of having “improperly accounted for more than $3.8 billion of expenses” (Klein, 2002, p. 1). Other companies too, such as Tyco, Qwest, and Adelphia Communications, all became involved in accounting- related scandals. These various scandals had a negative impact on public views regarding the accounting profession. As stated in an article in the CPA Letter, the high-profile business failures of Enron and others “called into question the effectiveness of the profession’s self-regulatory process as well as the effectiveness of the audit to uphold the public trust in the capital market” (Landmark accounting reform, 2002, p. 1). Many people began arguing for stricter regulations in the accounting industry. The Securities and Exchange Commission (SEC), for...
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