Public Company Accounting Oversight Board
| Author | Bernard Newman |
| Pages | 622-624 |
Page 622
The Sarbanes-Oxley Act of 2002 began with this statement of purpose: to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. As stated in the act:
There is established the Public Company Accounting Oversight Board (PCAOB), to oversee the audit of public companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies the securities of which are sold to, and held by and for, public investors. The Board shall be a body corporate, operate as a nonprofit corporation, and have succession until dissolved by an Act of Congress. (Sec. 101)
The board provides a structure that is a marked departure from the earlier regulatory structure. Previously, the Securities and Exchange Commission (SEC) had delegated a considerable degree of rule making and oversight to the public accounting profession. Nevertheless, with the initial decisions of the PCAOB in the spring of 2003, rule making for auditing and oversight of auditors and their firms became fully the responsibility of the PCAOB itself.
Page 623
As stated in the act, the board has five members, "appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public." Furthermore, the members are expected to be knowledgeable of the nature of financial disclosures required of issuers under the securities laws and of the obligations of those who undertake audits of such issuers and issue reports.
Two members, and only two members, are to be certified public accountants (CPAs) or have been CPAs previously. If one of the two members is the chairperson of the board, he or she "may not have been a practicing certified public accountant for at least five years prior to his or her appointment to the Board." Members serve on a full-time basis and may not engage in any other business or professional activity during their service as board members.
Members are appointed for terms of five years and no member may serve for more than two terms, whether or not the terms of service are consecutive.
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