The document provides an overview of the PCAOB reporting requirements for auditing firms. It discusses how the PCAOB aims to reduce financial fraud by requiring firms to submit annual and current reports on their audit practices and personnel. These reports collect information on the firm to confirm their independence and integrity. The document also outlines auditor responsibilities to detect fraud during audits and alternatives to the PCAOB such as strengthening the SEC.
The document outlines a detailed "Due Diligence" checklist for investigating a company prior to an acquisition or merger. It includes requests for documents related to corporate matters, financials, management and operations, employees, insurance, real estate and equipment, government regulation, and any pending litigation. The checklist aims to provide information on all material legal, financial and operational aspects of the company.
This document is a proxy statement for the annual shareholders' meeting of the Federal National Mortgage Association (Fannie Mae). It provides details on the date, time, and location of the meeting, as well as the matters that will be voted on, including the election of directors, ratification of auditors, approval of an amendment to an employee stock plan, and a shareholder proposal. It gives information on shareholder voting rights and the number of shares outstanding. The meeting will take place on May 25, 2004 in Chicago, where shareholders will vote on the election of directors, ratification of auditors, approval of an employee stock plan amendment, and a shareholder proposal on cumulative voting.
Accounting For Uncertainty In Income Tax For Nonpublic Enterprises 91509Agronenthal
The document discusses the FASB's efforts to provide guidance on how certain aspects of ASC 740, which includes FIN 48, apply to nonpublic entities like pass-through entities and not-for-profit organizations. Originally, FIN 48 was effective for fiscal years beginning after December 15, 2006, but the FASB provided two deferrals for nonpublic entities due to a lack of clear guidance. In September 2009, the FASB issued ASU 2009-06 to clarify application of ASC 740 for pass-throughs and non-profits, ending the deferral period.
The Sarbanes-Oxley Act of 2002 was created in response to major corporate and accounting scandals to increase corporate accountability and enhance financial disclosures. It established the Public Company Accounting Oversight Board to oversee audits of public companies. Key provisions require CEOs and CFOs to certify financial reports, ban auditors from providing non-audit services, require audit committee independence, and provide whistleblower protection to strengthen corporate responsibility and integrity. The Act aims to restore investor confidence through heightened transparency and accuracy in financial reporting.
This document provides an overview of chapter 1 of an accounting textbook, including a table of topics covered in the chapter and case/question assignments. It also includes sample solutions to codification exercises and answers to questions about the development of accounting standards and standard-setting bodies in the United States.
The document discusses new regulatory guidance for banks on assessing foreclosure processing. It outlines six key areas regulators expect banks to address: foreclosure governance, dual tracking, affidavit practices, documentation, legal compliance, and third party management. It advises banks regulated by the OCC to conduct self-assessments of their foreclosure processes in these areas to ensure compliance and avoid penalties. The assessment involves reviewing internal foreclosure policies, conducting an independent foreclosure file review, and auditing external law firms involved in processing foreclosures.
Solution Manual Advanced Accounting 9th Edition by Baker Chapter 14Saskia Ahmad
The document discusses SEC reporting requirements for public companies. It provides answers to multiple-choice questions covering topics such as the legal authority of the SEC, securities acts of 1933 and 1934, SEC forms like 10-K and 8-K, registration statements, and the Foreign Corrupt Practices Act. It also includes solutions to cases analyzing objectives of securities acts, roles of the SEC and FASB, information in proxy statements, and required disclosures in Form 10-Ks.
The SEC regulates financial reporting and disclosures of public companies. It was given authority by the Securities Acts of 1933 and 1934 to require companies to register securities and make periodic financial disclosures. The SEC oversees registration statements, reviews financial filings like the annual 10-K, and enforces regulations around proper financial reporting, disclosures, and governance. Major forms companies use for registration and reporting include the S-1, 10-K, 10-Q, and 8-K. Key requirements for public companies outlined in the Sarbanes-Oxley Act of 2002 include CEO/CFO certification of financial reports, management assessment of internal controls, and auditor attestation of the assessment.
The document outlines a detailed "Due Diligence" checklist for investigating a company prior to an acquisition or merger. It includes requests for documents related to corporate matters, financials, management and operations, employees, insurance, real estate and equipment, government regulation, and any pending litigation. The checklist aims to provide information on all material legal, financial and operational aspects of the company.
This document is a proxy statement for the annual shareholders' meeting of the Federal National Mortgage Association (Fannie Mae). It provides details on the date, time, and location of the meeting, as well as the matters that will be voted on, including the election of directors, ratification of auditors, approval of an amendment to an employee stock plan, and a shareholder proposal. It gives information on shareholder voting rights and the number of shares outstanding. The meeting will take place on May 25, 2004 in Chicago, where shareholders will vote on the election of directors, ratification of auditors, approval of an employee stock plan amendment, and a shareholder proposal on cumulative voting.
Accounting For Uncertainty In Income Tax For Nonpublic Enterprises 91509Agronenthal
The document discusses the FASB's efforts to provide guidance on how certain aspects of ASC 740, which includes FIN 48, apply to nonpublic entities like pass-through entities and not-for-profit organizations. Originally, FIN 48 was effective for fiscal years beginning after December 15, 2006, but the FASB provided two deferrals for nonpublic entities due to a lack of clear guidance. In September 2009, the FASB issued ASU 2009-06 to clarify application of ASC 740 for pass-throughs and non-profits, ending the deferral period.
The Sarbanes-Oxley Act of 2002 was created in response to major corporate and accounting scandals to increase corporate accountability and enhance financial disclosures. It established the Public Company Accounting Oversight Board to oversee audits of public companies. Key provisions require CEOs and CFOs to certify financial reports, ban auditors from providing non-audit services, require audit committee independence, and provide whistleblower protection to strengthen corporate responsibility and integrity. The Act aims to restore investor confidence through heightened transparency and accuracy in financial reporting.
This document provides an overview of chapter 1 of an accounting textbook, including a table of topics covered in the chapter and case/question assignments. It also includes sample solutions to codification exercises and answers to questions about the development of accounting standards and standard-setting bodies in the United States.
The document discusses new regulatory guidance for banks on assessing foreclosure processing. It outlines six key areas regulators expect banks to address: foreclosure governance, dual tracking, affidavit practices, documentation, legal compliance, and third party management. It advises banks regulated by the OCC to conduct self-assessments of their foreclosure processes in these areas to ensure compliance and avoid penalties. The assessment involves reviewing internal foreclosure policies, conducting an independent foreclosure file review, and auditing external law firms involved in processing foreclosures.
Solution Manual Advanced Accounting 9th Edition by Baker Chapter 14Saskia Ahmad
The document discusses SEC reporting requirements for public companies. It provides answers to multiple-choice questions covering topics such as the legal authority of the SEC, securities acts of 1933 and 1934, SEC forms like 10-K and 8-K, registration statements, and the Foreign Corrupt Practices Act. It also includes solutions to cases analyzing objectives of securities acts, roles of the SEC and FASB, information in proxy statements, and required disclosures in Form 10-Ks.
The SEC regulates financial reporting and disclosures of public companies. It was given authority by the Securities Acts of 1933 and 1934 to require companies to register securities and make periodic financial disclosures. The SEC oversees registration statements, reviews financial filings like the annual 10-K, and enforces regulations around proper financial reporting, disclosures, and governance. Major forms companies use for registration and reporting include the S-1, 10-K, 10-Q, and 8-K. Key requirements for public companies outlined in the Sarbanes-Oxley Act of 2002 include CEO/CFO certification of financial reports, management assessment of internal controls, and auditor attestation of the assessment.
The Sarbanes-Oxley Act at 15 (EY Publication)Azhar Qureshi
The Sarbanes-Oxley Act of 2002 (SOX) established the Public Company Accounting Oversight Board (PCAOB) to oversee audits of public companies and improve accountability in financial reporting. SOX also strengthened corporate governance and financial disclosure. The PCAOB registers audit firms, inspects audits for compliance, and sets auditing standards. SOX has improved audit quality and increased transparency and oversight of both companies and auditors. While some provisions like internal control reporting have faced criticism, SOX overall increased investor confidence in US financial markets.
This document provides an overview of topics, questions, and cases related to accounting standards and financial reporting. It includes:
1. An assignment classification table that matches topics in the chapter to related questions and cases.
2. An assignment characteristics table that describes different accounting cases, their level of difficulty, and estimated time to complete.
3. The answers to several questions about the objectives of financial reporting, the role of standards-setting bodies like the FASB and SEC, and the process for developing accounting standards.
This document discusses corporate compliance with the Sarbanes-Oxley Act and achieving an effective internal control environment based on the COSO framework. It argues that while many companies have focused on complying with specific SOX sections like 404, true compliance requires addressing the full depth of the "compliance iceberg" as defined by COSO. This includes controls for operations, compliance with other regulations, and unique organizational processes. It also emphasizes that compliance requires adhering to the spirit of establishing effective controls, not just the letter of satisfying individual SOX sections. Monitoring and separate evaluation are key to ensuring controls are properly implemented and maintained throughout an organization.
The SEC has increased its scrutiny of the private equity industry since 2012 when many firms were required to register under Dodd-Frank. The SEC is focusing on seven key areas: 1) ensuring robust compliance programs, 2) clarity in limited partnership agreements regarding fees and expenses, 3) oversight of "zombie" managers, 4) proper allocation of expenses in separate accounts, 5) disclosure of operating partner costs, 6) avoidance of improperly shifting general expenses to funds, and 7) transparency around all fees charged. Private equity firms can expect more regulatory actions and should proactively improve their compliance programs, policies and disclosures in these areas.
The SEC staff provided guidance on key topics discussed at a recent SEC conference:
1) The SEC expects registrants' disclosures to evolve over time to reflect new accounting standards and emerging risks like Brexit and the LIBOR transition.
2) On revenue recognition, the SEC commented on significant judgment areas in ASC 606 and encouraged continued improvement of disclosures.
3) The SEC will seek input on reducing quarterly reporting burdens while maintaining investor protections.
Assess the ethical requirements as outlined in the Sarbanes-Oxley Act-.docxbickerstaffinell
Assess the ethical requirements as outlined in the Sarbanes-Oxley Act, indicating whether or not you believe the requirements are adequate to ensure integrity in financial accounting and reporting activities. Suggest improvements that may be needed while providing support for your rationale.
Solution
The main points that are included in the act which will improve the corporate governance and reduce the accounting scandals that had happened in the past like enron and worldcom:
1) Corporate Responsibility in Financial Reporting: The act requires that principal executive and financial officers certify that they have reviewed the findings of annual or quarterly reports, and find the statements within to be accurate and free of any material errors.This makes the management highly responsible for the both internal and external audit and they have to see there is no errors the process followed.
2) Conflicts of Interest: illegal for any issuer to extend or maintain credit in the form of a personal loan to directors or executive officers of that issuer. This indicates that the directors can not act as they want and take loans fot themselves for the company they are shareholders
3) Code of Ethics Requirement:T o promote \"honest and ethical conduct; full, fair, accurate, timely and understandable disclosure in periodic reports;\" and \"compliance with applicable governmental rules and regulations.
4) Real Time Disclosures: Any material change in financial condition or operations must be quickly and urgently disclosed by the issuer in easy to understand terms. Thsi makes the shareholders to trust and develop integrity towards the management and increases the accountability of the management as well as shareholders
5) Whistleblower Protections:The employees of publicly traded companies who provide evidence of fraud are afforded protections against reprisals and discrimination. If an employee feels he has been retaliated against for reporting violations, he can seek relief by filing a complaint with the Secretary of Labor. As they are one who involved in day to day operations and know better than the investors what is wrong going on in the company. They will ensure that if something is cookin up by the management can be made public and they will be given protection.
.
Sarbanes-Oxley Section 404 requires companies to assess and report on the effectiveness of their internal controls. However, many companies have only addressed the requirements of Section 404 itself, which represents just the "tip of the compliance iceberg." To fully comply with the spirit of Sarbanes-Oxley, companies need to implement the integrated internal control framework as defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The COSO framework addresses five components of internal control - control environment, risk assessment, control activities, information and communication, and monitoring - that encompass controls over financial reporting as well as operational and compliance areas. Properly addressing all elements of the COSO framework
GT - Banking & Securities Update - Fall 2012Grant Thornton
This document provides a summary of key regulatory, accounting, and audit updates relevant to banks and securities firms. Some of the major topics covered include:
1) The FASB proposed expanded liquidity risk and interest rate risk disclosures for financial institutions and other entities.
2) The PCAOB released guidance on the audit inspection process for audit committees and issued a revised standard on audit committee communications.
3) Regulators such as the OCC and SEC provided updates on topics like troubled debt restructurings, common accounting issues for banks, and structured note disclosures.
4) Other standards-setting bodies like the FASB and AICPA provided updates on projects regarding items reclassified from
The document discusses Singapore's implementation of new laws requiring companies and limited liability partnerships to maintain registers of beneficial ownership information, including details on key definitions, compliance resources, and background on international standards promoting transparency of beneficial ownership. It outlines Singapore's approach of having companies privately maintain beneficial ownership registers accessible only to law enforcement.
The document discusses Singapore's implementation of new laws requiring companies and limited liability partnerships to maintain registers of beneficial ownership information, including details on key definitions, the obligations of companies and controllers, and resources that will be provided to help companies comply. It also provides background on international standards around beneficial ownership transparency and Singapore's approach compared to other jurisdictions.
This document provides information about ACC 291, an online accounting course, and summarizes its contents. It includes the ACC 291 entire course and final exam guide, discussion questions, summaries of accounting principles and financial statements, and a sample final exam question. The document aims to help students learn accounting concepts and prepare for the ACC 291 final exam.
How SOX changed the accounting industry when it was implemented. The background data that lead to the SOX overhaul and has it accomplished what it was drafted to do?
Topic: SOX; Type of paper: Essay; Subject: Accounting and Finance;
Academic Level: Undergraduate; Citation Style: Chicago; Language: English (U.S)
The "Big 4" audit firms - PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte - dominate the global financial audit market. While they audit most large multinational companies, concerns have been raised about risks to audit quality from a lack of competition. Some proposals to address this include mandatory audit firm rotation or increased regulatory oversight of the audit process. However, others argue this could increase costs for companies without necessarily improving quality. Overall, there is debate around how to strengthen independence and effectiveness within the concentrated global audit industry.
Advanced Auditing and assurance ,chapter1seidIbrahim2
The document provides an overview of auditing, including:
1. The origins and evolving definitions of auditing from verifying accounts to determining fairness in financial statements.
2. The increased demand for auditing due to factors like separation of ownership and control, regulatory requirements, and complexity of financial information.
3. The key differences between accounting, which prepares financial information, and auditing, which evaluates the reliability of that information and the processes that generated it.
This document provides an overview of the key provisions and titles of the Sarbanes-Oxley Act of 2002, which was passed in response to major corporate accounting scandals and failures of corporate governance. It established new or expanded standards for all U.S. public company boards, management, and public accounting firms. The act created the Public Company Accounting Oversight Board to oversee audits of public companies and established new rules regarding auditor independence, corporate responsibility, financial disclosure, analyst conflicts of interest, and criminal penalties for fraud or destruction of records.
Regulatory Standard Settin Developments- Septmber 2015PwC
The document summarizes recent regulatory developments from the FASB, PCAOB, and SEC. The FASB continues work on its revenue recognition and simplification initiatives. The PCAOB seeks comment on potential audit quality indicators and disclosure of engagement partner names. The SEC issued concept releases on audit committee disclosure and CEO pay ratios and proposed a clawback rule for erroneous executive compensation.
The SEC Chief Accountant discussed considerations for adopting new GAAP standards on revenue recognition, leases and credit losses. He stressed the importance of effective audit committee oversight of the adoption process and thoughtful planning by management for new revenue standard disclosures. The Chief Accountant also emphasized the need for adequate accounting transition disclosures and concurrent implementation of the new standards.
For more course tutorials visit
www.newtonhelp.com
1.Developing an understanding of the client's business and industry is essential to proficiency as discussed in the general standards of GAAS. (Points: 4)
The Sarbanes-Oxley Act at 15 (EY Publication)Azhar Qureshi
The Sarbanes-Oxley Act of 2002 (SOX) established the Public Company Accounting Oversight Board (PCAOB) to oversee audits of public companies and improve accountability in financial reporting. SOX also strengthened corporate governance and financial disclosure. The PCAOB registers audit firms, inspects audits for compliance, and sets auditing standards. SOX has improved audit quality and increased transparency and oversight of both companies and auditors. While some provisions like internal control reporting have faced criticism, SOX overall increased investor confidence in US financial markets.
This document provides an overview of topics, questions, and cases related to accounting standards and financial reporting. It includes:
1. An assignment classification table that matches topics in the chapter to related questions and cases.
2. An assignment characteristics table that describes different accounting cases, their level of difficulty, and estimated time to complete.
3. The answers to several questions about the objectives of financial reporting, the role of standards-setting bodies like the FASB and SEC, and the process for developing accounting standards.
This document discusses corporate compliance with the Sarbanes-Oxley Act and achieving an effective internal control environment based on the COSO framework. It argues that while many companies have focused on complying with specific SOX sections like 404, true compliance requires addressing the full depth of the "compliance iceberg" as defined by COSO. This includes controls for operations, compliance with other regulations, and unique organizational processes. It also emphasizes that compliance requires adhering to the spirit of establishing effective controls, not just the letter of satisfying individual SOX sections. Monitoring and separate evaluation are key to ensuring controls are properly implemented and maintained throughout an organization.
The SEC has increased its scrutiny of the private equity industry since 2012 when many firms were required to register under Dodd-Frank. The SEC is focusing on seven key areas: 1) ensuring robust compliance programs, 2) clarity in limited partnership agreements regarding fees and expenses, 3) oversight of "zombie" managers, 4) proper allocation of expenses in separate accounts, 5) disclosure of operating partner costs, 6) avoidance of improperly shifting general expenses to funds, and 7) transparency around all fees charged. Private equity firms can expect more regulatory actions and should proactively improve their compliance programs, policies and disclosures in these areas.
The SEC staff provided guidance on key topics discussed at a recent SEC conference:
1) The SEC expects registrants' disclosures to evolve over time to reflect new accounting standards and emerging risks like Brexit and the LIBOR transition.
2) On revenue recognition, the SEC commented on significant judgment areas in ASC 606 and encouraged continued improvement of disclosures.
3) The SEC will seek input on reducing quarterly reporting burdens while maintaining investor protections.
Assess the ethical requirements as outlined in the Sarbanes-Oxley Act-.docxbickerstaffinell
Assess the ethical requirements as outlined in the Sarbanes-Oxley Act, indicating whether or not you believe the requirements are adequate to ensure integrity in financial accounting and reporting activities. Suggest improvements that may be needed while providing support for your rationale.
Solution
The main points that are included in the act which will improve the corporate governance and reduce the accounting scandals that had happened in the past like enron and worldcom:
1) Corporate Responsibility in Financial Reporting: The act requires that principal executive and financial officers certify that they have reviewed the findings of annual or quarterly reports, and find the statements within to be accurate and free of any material errors.This makes the management highly responsible for the both internal and external audit and they have to see there is no errors the process followed.
2) Conflicts of Interest: illegal for any issuer to extend or maintain credit in the form of a personal loan to directors or executive officers of that issuer. This indicates that the directors can not act as they want and take loans fot themselves for the company they are shareholders
3) Code of Ethics Requirement:T o promote \"honest and ethical conduct; full, fair, accurate, timely and understandable disclosure in periodic reports;\" and \"compliance with applicable governmental rules and regulations.
4) Real Time Disclosures: Any material change in financial condition or operations must be quickly and urgently disclosed by the issuer in easy to understand terms. Thsi makes the shareholders to trust and develop integrity towards the management and increases the accountability of the management as well as shareholders
5) Whistleblower Protections:The employees of publicly traded companies who provide evidence of fraud are afforded protections against reprisals and discrimination. If an employee feels he has been retaliated against for reporting violations, he can seek relief by filing a complaint with the Secretary of Labor. As they are one who involved in day to day operations and know better than the investors what is wrong going on in the company. They will ensure that if something is cookin up by the management can be made public and they will be given protection.
.
Sarbanes-Oxley Section 404 requires companies to assess and report on the effectiveness of their internal controls. However, many companies have only addressed the requirements of Section 404 itself, which represents just the "tip of the compliance iceberg." To fully comply with the spirit of Sarbanes-Oxley, companies need to implement the integrated internal control framework as defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The COSO framework addresses five components of internal control - control environment, risk assessment, control activities, information and communication, and monitoring - that encompass controls over financial reporting as well as operational and compliance areas. Properly addressing all elements of the COSO framework
GT - Banking & Securities Update - Fall 2012Grant Thornton
This document provides a summary of key regulatory, accounting, and audit updates relevant to banks and securities firms. Some of the major topics covered include:
1) The FASB proposed expanded liquidity risk and interest rate risk disclosures for financial institutions and other entities.
2) The PCAOB released guidance on the audit inspection process for audit committees and issued a revised standard on audit committee communications.
3) Regulators such as the OCC and SEC provided updates on topics like troubled debt restructurings, common accounting issues for banks, and structured note disclosures.
4) Other standards-setting bodies like the FASB and AICPA provided updates on projects regarding items reclassified from
The document discusses Singapore's implementation of new laws requiring companies and limited liability partnerships to maintain registers of beneficial ownership information, including details on key definitions, compliance resources, and background on international standards promoting transparency of beneficial ownership. It outlines Singapore's approach of having companies privately maintain beneficial ownership registers accessible only to law enforcement.
The document discusses Singapore's implementation of new laws requiring companies and limited liability partnerships to maintain registers of beneficial ownership information, including details on key definitions, the obligations of companies and controllers, and resources that will be provided to help companies comply. It also provides background on international standards around beneficial ownership transparency and Singapore's approach compared to other jurisdictions.
This document provides information about ACC 291, an online accounting course, and summarizes its contents. It includes the ACC 291 entire course and final exam guide, discussion questions, summaries of accounting principles and financial statements, and a sample final exam question. The document aims to help students learn accounting concepts and prepare for the ACC 291 final exam.
How SOX changed the accounting industry when it was implemented. The background data that lead to the SOX overhaul and has it accomplished what it was drafted to do?
Topic: SOX; Type of paper: Essay; Subject: Accounting and Finance;
Academic Level: Undergraduate; Citation Style: Chicago; Language: English (U.S)
The "Big 4" audit firms - PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte - dominate the global financial audit market. While they audit most large multinational companies, concerns have been raised about risks to audit quality from a lack of competition. Some proposals to address this include mandatory audit firm rotation or increased regulatory oversight of the audit process. However, others argue this could increase costs for companies without necessarily improving quality. Overall, there is debate around how to strengthen independence and effectiveness within the concentrated global audit industry.
Advanced Auditing and assurance ,chapter1seidIbrahim2
The document provides an overview of auditing, including:
1. The origins and evolving definitions of auditing from verifying accounts to determining fairness in financial statements.
2. The increased demand for auditing due to factors like separation of ownership and control, regulatory requirements, and complexity of financial information.
3. The key differences between accounting, which prepares financial information, and auditing, which evaluates the reliability of that information and the processes that generated it.
This document provides an overview of the key provisions and titles of the Sarbanes-Oxley Act of 2002, which was passed in response to major corporate accounting scandals and failures of corporate governance. It established new or expanded standards for all U.S. public company boards, management, and public accounting firms. The act created the Public Company Accounting Oversight Board to oversee audits of public companies and established new rules regarding auditor independence, corporate responsibility, financial disclosure, analyst conflicts of interest, and criminal penalties for fraud or destruction of records.
Regulatory Standard Settin Developments- Septmber 2015PwC
The document summarizes recent regulatory developments from the FASB, PCAOB, and SEC. The FASB continues work on its revenue recognition and simplification initiatives. The PCAOB seeks comment on potential audit quality indicators and disclosure of engagement partner names. The SEC issued concept releases on audit committee disclosure and CEO pay ratios and proposed a clawback rule for erroneous executive compensation.
The SEC Chief Accountant discussed considerations for adopting new GAAP standards on revenue recognition, leases and credit losses. He stressed the importance of effective audit committee oversight of the adoption process and thoughtful planning by management for new revenue standard disclosures. The Chief Accountant also emphasized the need for adequate accounting transition disclosures and concurrent implementation of the new standards.
For more course tutorials visit
www.newtonhelp.com
1.Developing an understanding of the client's business and industry is essential to proficiency as discussed in the general standards of GAAS. (Points: 4)
1. Case Study 2: A Practical Guide to the New PCAOB Reporting Requirements
Lee Ann Perry-James
A Practical Guide to the New PCAOB Reporting Requirements
January 29, 2012
Professor Dr. Jack McCaffery
ACC 571 Forensic Accounting
2. A Practical Guide to the New PCAOB Reporting Requirements
The Sarbanes-Oxley Act of 2002 (SOX) requires that any accounting firm that prepares
or issues an audit report with respect to a U.S. public company must register with the Public
Company Accounting Oversight Board (PCAOB). Effective December 31, 2009, accounting
firms registered with the PCAOB are required to file annual and current reports with the
PCAOB. ("Bylaws and rules," 2011)
2. Justify how the reporting requirements of the PCAOB reduce the chance of financial
fraud.
PCAOB reduces the chances of financial fraud by requiring all audit firms to 1) to keep
the PCAOB up-to-date on a firm's basic professional information, such as name, location,
licenses, and contact information; 2) to provide the PCAOB with current information regarding a
firm's audit practice in order to facilitate analysis and inspection by the PCAOB and keep the
public informed of such information; and 3) to alert the PCAOB of any events that would require
more immediate action by the PCAOB in terms of inspections or enforcement and that might
otherwise warrant public disclosure per of SOX section 102(d), (Michael, 2005)
The collection of current data is an attempt to confirm auditors are remaining unbiased
and at arm's length in their findings of their client's financial records and to make public the
auditors information to investors. This submission is completely based on honesty of the
submitter of forms 1,2 and 3 until such forms are investigated by PCAOB.
Form 1 is required before an accounting firm is allowed to attest to financial statements.
An annual report, Form 2, is to provide a profile of the firm at a point in time based on its
activity related to issuers over the most recent 12-month period. Form 2 requires a firm to
provide, among other things, information about its public issuer-related practice, internal and
2
3. A Practical Guide to the New PCAOB Reporting Requirements
external resources on which the firm draws in performing audits, disciplinary histories of new
personnel, certain new relationships and acquisitions, information about fees billed to issuer
audit clients for various categories of services, and an affirmation of its statutory obligations to
cooperate with the PCAOB. (Michael, 2005) In addition to the annual and current reports
required on an ongoing basis, Form 3 is required for all material changes in the firm's disclosures
that had occurred since such firm's initial registration with Form 1. ("Public Company
Accounting," 2010)
This attempt to gather current information offers the believe that the data is 1) accurate,
2) exposes possible lack of integrity of the auditors or their firm. PCAOB can investigate any
firm at any time. If inaccuracies are found in the reporting forms, the PCAOB can bring
disciplinary actions against the firm and to the person submitting the form in the manner of fines,
removal of application to PCAOB or criminal actions. It is wise for a firm or person submitting a
form to report accurately but in the event an error occurs, they submit an addendum to the form
immediately. ("Public Company Accounting," 2010)
3. Illustrate the responsibilities of an auditing firm to detect fraud during the audit process.
SAS no. 99 requires the auditors and their firm to consider other information that may be
helpful in identifying the risks of material misstatement due to fraud.
The engagement team’s brainstorming session.
Client acceptance and continuance procedures.
Reviews of interim financial information.
Consideration of inherent risks at the account or transaction level.(Ramos, 2003)
3
4. A Practical Guide to the New PCAOB Reporting Requirements
The brain storming sessions can reveal what is talked about but also what is not talked about.
The omission of information is just as important and needs to be questioned. If a client does not
have acceptable procedures and are not open to developing appropriate procedures then risk is
apparent and needs to be investigated to reveal any misstatement of an account or journal entries.
In those instances where the misstatement is or may be the result of fraud, and the effect
either is material or cannot be determined, the following steps are required:
Attempt to obtain additional evidence.
Consider the implications for other aspects of the audit.
Discuss the matter and the approach for further investigation with an appropriate level
of management that is at least one level above those involved and with senior
management and the audit committee.
If appropriate, suggest the client consult with legal counsel.(Ramos, 2003)
SAS no. 99 provides guidance on the auditor’s course of action when the risk of material
misstatement due to fraud is such that he or she is considering withdrawing from the
engagement.
4. Recommend alternatives to the PCAOB.
The SEC was established to perform two broad functions: protect investors and promote
stability in the financial markets by enforcing securities laws enacted by Congress. The functions
of the SEC are broken down into numerous departments. The main departments are Corporate
Finance, which oversees the accuracy of public corporations' financial disclosures; Investment
Management, which supervises investment companies and investment advisors; Market
Regulation, which creates regulatory policy; and Enforcement, which prosecutes violators of
federal securities law. It is the responsibility of the Commission to:
4
5. A Practical Guide to the New PCAOB Reporting Requirements
interpret federal securities laws;
issue new rules and amend existing rules;
oversee the inspection of securities firms, brokers, investment advisers, and ratings
agencies;
oversee private regulatory organizations in the securities, accounting, and auditing fields;
and
coordinate U.S. securities regulation with federal, state, and foreign authorities.
(Unknown, 2011)
Had the SEC performed its tasks regularly and timely then PCAOB would not be
necessary. PCAOB charges large fees for their services but very little return is published to the
very shareholders they are to protect. I recommend an overhaul of the SEC to perform the tasks
the agency was initially designed to uphold.
5. Prepare a sample timeline for PCAOB reporting.
Form 1
Submit application on line 24 hours for review
Acceptance of Form 1
Pay fees Board reviews for 45 days
Acceptance of Form 1
Board request additional information or issuance hearing notice Board reviews for additional 45 days
Form 2
Annual Period covers April 1 to March 31 Due by June 30
Form 3
30 days after special event Reg. before 12/21/09 "bring current" event by 2/1/10 Reg. after 12/31/09 30 days after special event
Form 4
14 days after the change or combination
5
6. A Practical Guide to the New PCAOB Reporting Requirements
("Public Company Accounting," 2010)
The PCAOB is designed to help investors feel better so they will continue investing in
the stock market just like the SEC Act of 1934. The main purposes of these laws can be reduced
to two common-sense notions:
Companies publicly offering securities for investment dollars must tell the public the
truth about their businesses, the securities they are selling, and the risks involved in
investing.
People who sell and trade securities – brokers, dealers, and exchanges – must treat
investors fairly and honestly, putting investors' interests first.
The SEC is the over PCAOB including the approval of the Board’s rules, standards, and
budget. The PCAOB.org site does offer inspection reports of auditors and firms but claims
"PORTIONS OF THE COMPLETE REPORT ARE OMITTED FROM THIS
DOCUMENT IN ORDER TO COMPLY WITH SECTIONS 104(g)(2) AND 105(b)(5)(A)
OF THE SARBANES-OXLEY ACT OF 2002" (Unknown 2010) on each of the investigation
reports that I reviewed. What is the real purpose of this agency? I do not see how it is providing
valuable information to the investors when the part of the report we need is omitted and it over
sited by a failing agency.
6
7. A Practical Guide to the New PCAOB Reporting Requirements
References
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