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Public Company Accounting Oversight Board Essay Sample

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Public Company Accounting Oversight Board Essay Sample

The PCAOB is a private sector, not for profit corporation, that has been created under the Sarbanes-Oxley Act, which falls under the 2002 U.S (Keown, 2004). Federal law. Its basic function is to oversee the auditors of public companies. Its purpose, therefore, is to ensure the preparation of fair, informative and independent audit reports, from the auditors, in order to protect the interests of the investors.

Organizations on the other hand have to ensure that the auditors they hire are registered as public auditing firm with the PCAOB. On the other side, auditing firms need to ensure that they set and comply with the auditing, quality control, ethics, independence and other standards that are set by the PCAOB. The PCAOB also has powers to conduct inspections of registered public accounting firms, whenever they prefer to. The PCAOB also has the authority to assess, allocate, and collect accounting support fees that fund the board.

Financial Accounting Standards Board (FASB)

The FASB is also a private, not for profit, organization, whose primary objective is to develop the Generally Accepted Accounting Principles (GAAP) in the best interest of the people of the United States. The FASB was created in 1973, and has been designated the responsibility of setting accounting standards for public companies located in the United States by the Securities and Exchange Commission (SEC) (Block, 2005).

FASB primary purpose of existence is to ensure the improvement in the standards of financial accounting and reporting, in order to make the process fairer and easier for the people, who are the owners of public companies. Another aspect includes rendering education and guidance to the major users of financial information, which may include creditors, banks, investors, and the public, who may want to invest in the organization. FASB also seeks to ensure uniformity of accounting standards amongst firms, so that inter-company comparisons can be of some significance.

Public companies need to ensure compliance with FASB standards by ensuring that their financial information is transparent, credible and understandable, and follows all the rules and regulations of the FASB, especially the GAAP.

Securities Exchange Commission (SEC)

SEC is a government commission that was created by the Congress on June 6, 1934 in order to regulate the securities market and to safeguard the rights of the investors. So, its primary responsibility is to ensure Federal securities law, which includes the Securities Act of 1933, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002 and other statutes (Block, 2005).

The SEC works hand in hand with several other organizations and bodies, which includes various self-regulatory organizations such as New York Stock Exchange (NYSE) and NASDAQ. It also works with other federal agencies, state securities regulators and law enforcement agencies to carry out actions against actors alleged to be in violation of the securities laws.

International Accounting Standards Board (IASB)

The IASB is a privately-funded, independent standards devising board based in London. It was founded on April 1, 2001. IASB’s prime responsibility includes development and maintenance of the International Financial Reporting Standards (IFRS).

IASB also has a parent entity, called the International Accounting Standards Committee Foundation (IASCF) which is also a not-for-profit corporation situated in the State of Delaware, US (Block, 2005).

The IASB is responsible for the formation of accounting standards and practices that are to be adopted and followed by companies all over the world. Inacse of organizations, their responsibility is to comply with the framework for the preparation and presentation of financial statements. This includes providing information that clearly indicates the change in financial position of a firm over time and to clearly indicate the current financial position of the firm, such that the information can be useful to a wide range of users, and helps them in making important economic decisions.

Work Cited

Block, Hirt (2005). Foundations of Financial Management (11th ed.) New York: McGraw-Hill.

Keown, Arthur J. (2004). Financial Management: Principles & Applications.

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