Public Company Accounting Oversight Board Registered Accountants

All accountants, in the US and foreign, that provides audited financial statements for public companies registered with the SEC (Securities and Exchange Commission) must be registered with the Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo. The PCAOB is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002 which is under the jurisdiction of the SEC. The Sarbanes-Oxley Act and the creation of the PCAOB were a result of the accounting fraud scandals of Enron and WorldCom.

Only Certified Public Accountants (CPA's) can prepare audited financial statements on behalf of a business or non-profit organization. In order for a non-certified accountant to become a CPA, the accountant needs to work for an accounting firm for a few years, acquire five hundred hours of auditing time, and pass a test from the American Institute of Certified Public Accountants as well as from their state. A CPA also must take 120 hours of continuing education courses every three years to maintain their license.

The purpose of the Public Company Accounting Oversight Board is to oversee auditors, (accounting firms, CPA’s, accountants) of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audited financial statements. The PCAOB’s goal is to improve the quality of audited financial statements, reduce the risk of auditing failures, and increase public trust in financial reporting processes and of the auditing profession. The PCAOB has established auditing, quality control, ethics, and independence standards to be used by registered public accounting firms and their respective accountants in the preparation of audited financial statements for publicly traded companies, as required by the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission (SEC).

The Sarbanes-Oxley Act of 2002 requires the PCAOB to: register all accounting firms, CPA’s, and accountants that audit public companies; inspect all registered firms and their accountants annually for those who annually audit over 100 public companies and a minimum of once every three years for those that audit under 100, assess the degree to which the firms and their accountants comply with the act, the rules of the PCAOB and the SEC, professional standards in connection with the performance and issuance of audited financial statements and attest services; related matters involving public companies, and investigate and discipline any firms and their accountants whom are in violation of specific laws or standards. All firms and their accountants are still required to have peer review of their auditing and accounting practice in order to satisfy the American Institute of Certified Public Accountants (AICPA) membership, federal regulatory (Generally Accepted Auditing Standards) and/or state licensing requirements. There are currently over 2,000 public firms registered with the PCAOB, with more pending registration. A list of current and pending registered firms can be found on the PCAOB website.

The PCAOB currently has pending a requirement that all registered firms and accountants submit an annual report on Form 2, provided on the PCAOB website, by June 30th, except for those firms and accountants that have been registered between April 1st and June 30th of that year. Also they will be required to pay an annual fee to the PCAOB by July 31st. As these requirements are still pending approval, the annual report and fees are not required for the 2009 calendar year deadlines. In these reports the registered accountants must provide various information for the year including: audited financial statement reports issued during the year; disciplinary history of any accountants that joined the firm during the year; a break down of the fees for services provided to all clients during the year, showing the percentage of the fees billed to public audit clients for audit services, other accounting services, tax services, and non-audit services. The PCAOB also requires registered accountants to submit special reports on Form 3 within 30 days of the occurrence of the special event. Such special events include change of name or contact information, withdrawal of an audited financial statement by an auditor if the client did not report withdrawal in the 8-K filing with the SEC, and if legal, administrative, or disciplinary action have been taken again the firm or its related accountants. These reports, along with reports from the PCAOB on its inspections of public company audits will be available to the public on their website.

It is the responsibility of the registered accountants that audit financial statements for public companies to provide accurate and independent reports. By following the rules and regulations of the PCAOB, AICPA, and GAAP, registered accountants can provide the highest quality of audited financial statements that fairly and accurately represent the public company, detect material misstatements and false or missing information caused by fraud, and protect the interest of investors.