Posted: November 24th, 2023

Regulatory and Compliance Issues, Paper help (1050 words)

Question description

Review the "Ethics in Action" scenario in Chapter 46 of your text.
Write a paper of not more than 1,050 words in which you answer the following questions:
Do you think that the creation and work of the Public Company
Accounting Oversight Board (PCAOB) has resulted in greater independence
of auditors of public companies?If auditing of 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?
Cite at least 5 peer-reviewed references.
Format your paper consistent with APA guidelines.
Ethics in Action scenario
Figure Public Company Accounting
Oversight Board
One of the main features of the
Sarbanes–Oxley Act (SOX) is the creation of an independent board that oversees
the audits of public companies. Congress’s perception was that auditing firms
were not sufficiently independent of the public companies they audited due in
part to the audit firms’ receiving sizable nonaudit consulting fees from their
audit clients. Thus, SOX created a Public Company Accounting Oversight Board
(PCAOB). Public accounting firms that audit financial statements of public
companies are required to register with PCAOB and submit to its rules. The
board is charged with adopting rules establishing auditing, quality control,
ethics, and independence standards. It has the power to regulate the nonaudit
services that audit firms may perform for their clients. The PCAOB has the
power to inspect periodically public accounting firms and to issue reports of
the results of the reviews. The purpose of inspections is to assess the degree
of compliance with the requirements of SOX, professional auditing standards, and
the rules of the PCAOB and the SEC in the performance of audits and the
issuance of audit reports of public companies. In addition, the PCAOB may
investigate and discipline audit firms and their partners and employees.
The PCAOB is not a federal
agency, but a nonprofit corporation with broad regulatory power like the
Financial Industry Regulatory Authority (FINRA), a self-regulatory organization
that regulates securities brokers and dealers. It has five members, only two of
which may be CPAs. No board member may receive any share of profits or
compensation from a public accounting firm.
• Do you think that the creation
and work of the PCAOB results in greater independence of auditors of public
companies?
• If auditing of 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?

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