Chairman James Doty noted, "An audit firm's candid discussion of any problems identified in the PCAOB
inspection can be useful to an audit committee in carrying out its responsibility for oversight of the audit engagement.
In August, the PCAOB
issued a concept release (www.
Meanwhile, in the nearly eight years of its existence since Sarbanes-Oxley was passed in 2002, the PCAOB
has done little to address auditing rules for off-balance sheet entities that were the core of Enron's accounting problems and that flared up again to hide debt at Lehman and other financial firms.
Specifically, they seemed bothered that PCAOB
members are not appointed by the president and can only be removed by the SEC "for cause.
5; however, this does not mark the finish line for the PCAOB
," said PCAOB
Chairman Mark W.
Still, the PCAOB
encourages integration and stressed this point in a Board Policy Statement on May 16, 2005.
The result of that effort, PCAOB
Standards and Related Rules, includes:
Professional standards: Accounting principles established by the standard-setting body described in Section 19(b) of the Securities Act of 1933 ('33 Act), as amended by the SOA, or prescribed by the SEC under '33 Act Section 19(a), or the Securities Exchange Act of 1934 ('34 Act) Section 13(b); and auditing standards, standards for attestation engagements, quality control policies and procedures, ethical and competency standards and independence standards that, according to the PCAOB
or SEC, relate to the preparation or issuance of audit reports for issuers; and are established or adopted by the PCAOB
or promulgated as SEC rules (SOA Section 2(a)(10)).
In response to costs, inefficiencies and over-reporting resulting from initial SOX compliance activities, the SEC and the PCAOB
have proposed improvements to current regulations, focusing internal control audit on matters that present the greatest risk of a material misstatement and emphasizing the higher risk stages of financial statement preparation such as the period-end close process.
chairman of the Financial Services Committee, pressed Doty on whether the PCAOB
would do a cost-benefit analysis before moving forward to issuing a proposal.
The court's decision rectifies the issue by eliminating the restrictions on the SEC's ability to remove PCAOB
Beckstead and Watts filed a lawsuit in 2006, after PCAOB
conducted an inspection of the firm.