PCAOB

Before and after Sarbanes-Oxley - learning to live with change

Less than two months after a jury found Arthur Andersen guilty of "corrupt persuasion" of others to withhold documents in the Enron investigation, Congress passed the Sarbanes-Oxley Act of 2002 (SOX), legislation designed to address the shock and anger in the country over the bankruptcies of WorldCom and Global Crossing, also clients of Arthur Andersen, and other business and accounting scandals.

SEC sanctions four accounting firms not registering with the PCAOB

The Securities and Exchange Commission (SEC) has taken action against four accounting firms and their principals saying that they issued audit reports in 2004 on SEC-listed companies without having registered with the Public Company Accounting Oversight Board (PCAOB). All four principals were censured by the Commission which found that they "willfully violated Section 102(a) of the Sarbanes-Oxley Act of 2002." Section 102(a) required the SEC to determine the timing of registration with the PCAOB.

PCAOB adopts rules for firm succession

The Public Company Accounting Oversight Board today adopted rules and a corresponding form that govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal form.Under Section 102(a) of the Sarbanes-Oxley Act of 2002 and PCAOB rules, a public accounting firm must be registered with the PCAOB in order to prepare or issue audit reports for public companies or to play a substantial role in the preparation or furnishing of such audit reports.

PCAOB adopts rules for accounting firm reporting

The Public Company Accounting Oversight Board last week adopted rules for annual and special reporting of information and events by accounting firms that are registered with the PCAOB.Section 102(d) of the Sarbanes-Oxley Act of 2002 provides that each registered public accounting firm shall submit an annual report to the Board, and also may be required to report more frequently, to provide information specified by the Board. The reporting requirements in the new rules are the first such requirements adopted by the Board.

PCAOB considers accounting firm registration rules

The Public Company Accounting Oversight Board will consider adopting rules requiring annual and special reporting of specified information by registered public accounting firms. The information would be made publicly available, subject to certain exceptions for confidential information.

PCAOB to discuss using non-U.S. inspectors

The Public Company Accounting Oversight Board will host a roundtable discussion on June 25, 2008 on a proposal regarding the circumstances in which it could rely fully on non-U.S. auditor oversight bodies in the context of inspections. Representatives of investors, registered accounting firms, and foreign regulators will participate in the discussion.

PCAOB taking nominations for Standing Advisory Group

The Public Company Accounting Oversight Board is soliciting nominations for members of its Standing Advisory Group. The Standing Advisory Group was created in 2003 to advise the Board in carrying out its standards-setting responsibilities. The Board values the diversified expertise of the group, and its input is utilized in developing standards.

PCAOB adopts new audit committee communication rule and amends tax services rule

The PCAOB voted last week to adopt Rule 3526, Communication with Audit Committees Concerning Independence, and an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles. The Board adopted Rule 3526 to enhance communication between audit committees and registered firms regarding the firm's independence.

PCAOB cites deficiencies in Grant Thornton audits

The Public Company Accounting Oversight Board (PCAOB) has found deficiencies in five audits conducted by Grant Thornton.Grant Thornton failed "to identify or appropriately address errors in the issuer's application of GAAP," said the PCAOB, which acts as an audit watchdog and annually inspects accounting firms with more than 100 public-company clients.Grant Thornton also did not perform certain audit tests to back up its opinions, the April 4 report said."In some c
A&A

PCAOB announces small business audit forums

The Public Company Accounting Oversight Board has announced the 2008 series of its Forums on Auditing in the Small Business Environment. These forums are designed to help share important information with registered public accounting firms and public companies operating in the small business community. The 2008 agenda will include a discussion of practical quality control policies and procedures and evolving accounting and auditing issues. The discussions also will address the application of certain auditing standards and observations from the Board's disciplinary orders.
A&A

PCAOB approves Auditing Standard No. 6 in response to FASB 154

The Public Company Accounting Oversight Board has voted to adopt Auditing Standard No. 6, Evaluating Consistency of Financial Statements, and an accompanying set of amendments to the Board's interim auditing standards. The Board adopted the standard and amendments in light of the Financial Accounting Standards Board's (FASB) issuance of Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections, and impending issuance of Statement of Financial Accounting Standards, The Hierarchy of Generally Accepted Accounting Principles.
Community News

PCAOB fines Deloitte $1 million

Deloitte & Touche has agreed to pay a $1 million penalty to settle accusations by the Public Company Accounting Oversight Board (PCAOB) that it allowed a partner who had performed poor audits in the past to conduct the 2003 audit of Ligand Pharmaceuticals, a public company based in San Diego. Under a provision of the Sarbanes-Oxley Act of 2002, the money will be used for accounting scholarships.The Deloitte partner, James L.

PwC defends audits faulted by PCAOB

PricewaterhouseCoopers LLC (PwC), in an occasionally strongly worded letter addressed to the Public Company Accounting Oversight Board (PCAOB), defended the quality of the six audits found to have deficiencies in the PCAOB's Report on 2006 Inspection of PricewaterhouseCoopers LLC, released October 18th.

PCAOB explains how auditors can apply AS No. 5

The Public Company Accounting Oversight Board has published for public comment staff guidance on auditing internal control over financial reporting in smaller public companies. The guidance explains how auditors can apply the Board's internal control auditing standard, Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements, to audits of smaller, less complex public companies. When it adopted Auditing Standard No.

PCAOB approves rules for firms that do not regularly issue audit reports

The Public Company Accounting Oversight Board has approved amendments regarding the inspection frequency for firms that do not regularly issue audit reports. The Board adopted two amendments to PCAOB Rule 4003, which addresses the minimum frequency with which the Board will conduct inspections of different categories of registered public accounting firms. The amendments approved today would eliminate Rule 4003's requirement that the Board regularly inspect each registered public accounting firm that plays a "substantial role" in audits but does not issue audit reports.

SEC charges 69 auditing firms and partners with SOX violation

The Securities and Exchange Commission has issued 69 charges against various accounting firms and partners for violation of a provision of the Sarbanes-Oxley (SOX) Act that requires registration with the Public Company Accounting Oversight Board (PCAOB). Thirty-seven separate firms were involved in the action. No Big Four or major accounting firms were among those charged. This is the first time the SEC has issued such charges. The SEC indicated that 53 audit reports of public companies were issued by those firms and partners who has not registered as required by SOX.

SEC approves PCAOB Auditing Standard No. 5

The Securities and Exchange Commission has voted unanimously in favor of a new auditing standard and other measures to increase the accuracy of financial reports while reducing unnecessary costs, especially for smaller public companies.The Commission expects the new auditing standard, in combination with the Commission's new management guidance, will make Section 404 audits and management evaluations more risk-based and scalable to company size and complexity."In approving Auditing Standard No.

PCAOB to consider proposing new rules

The Public Company Accounting Oversight Board has scheduled an open meeting for 9:30 a.m. Tuesday, July 24, 2007, in the Board’s meeting room at 1666 K St. NW, Washington, D.C. The Board will consider proposing an ethics and independence rule concerning communication with audit committees that would supersede the Board's interim independence requirement, Independence Standards Board Standard No.
Community News

Grant Thornton, PCAOB spar over inspection report

The PCAOB has released its inspection report on CPA firm Grant Thornton covering the period from May 2006 through January 2007. Audits of eight companies were examined. Several audit deficiencies are noted in the report, such as a failure to identify or appropriately address errors in the application of GAAP in the selected audits, including errors that seemed likely to be material to financial statements.

New SOX guidelines benefit small businesses: costs uncertain

The new standard for audits of public companies under section 404 of the Sarbanes Oxley Act, Accounting Standard No. 5, released by the Public Company Accounting Oversight Board (PCAOB) last month, should ease the burden of compliance for small businesses, but critics continue to press for delay in implementation.

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