The PCAOB (Public Company Accounting Oversight Board) was created by the Sarbanes-Oxley Act of 2002. They are a private-sector, non-profit corporation whose stated purpose is to ‘oversee the auditors of public companies in order to protect the investors and further the public interest in the preparation of informative, fair and independent audit reports.’ The Board has five members, each appointed by the U.S. Securities and Exchange Commission.
Section 104 of the Sarbanes-Oxley Act of 2002 requires the Board to conduct inspections of registered public accounting firms. In those inspections, the Board assesses compliance with the Act, the rules of the Board, the rules of the Securities and Exchange Commission, and professional standards, in connection with the firm’s performance of audits, issuance of audit reports, and related matters involving issuers. The Act requires the Board to conduct those inspections annually for firms that provide audit reports for more than 100 issuers and at least triennially for firms that provide audit reports for fewer issuers. Initially, PCAOB tried to judge both GAAP (generally accepted accounting principles) and GAAS (generally accepted auditing standards) but they quickly became overwhelmed and ceased this practice during 2006 inspections. Since then and currently, PCAOB focuses on GAAS and is continuously narrowing their inspections scope to fit their inspection team time available to make report turnaround more current. PCAOB judges GAAP issues now only if departures are sharp and inadequately explained.
MaloneBailey, LLP is in elite company as one of only ten firms in the world that requires an annual inspection by the PCAOB.
The Quintessence of Audit Quality
Our 2011 annual visit with the PCAOB has recently come and gone. With their exit, we received the least amount fewest number of engagement findings (4) to date of all of our 6 inspections from 2004 to 2011. All findings were considered by us to be highly judgmental and worthy of further debate among those in higher authority within the PCAOB.
Our goal continues to be zero written findings from the PCAOB which requires continued strides toward higher audit quality from everyone. It all begins and ends with our quality of audits as delivered from the newest intern to the most experienced partner. Our audit quality will continually sustain and reward us.
View the PCAOB Inspection 2008 report and our firms response, by clicking links below.