Frequently Asked Questions

How does the Public Company Accounting Oversight Board, created by SOX, regulate auditing practices?

The Public Company Accounting Oversight Board (PCAOB) was established by the Sarbanes-Oxley Act (SOX) as a nonprofit corporation to oversee and regulate all auditing practices related to publicly traded companies. The PCAOB plays a crucial role in ensuring that companies adhere to the new corporate governance guidelines set out by SOX. One of the key responsibilities of the PCAOB is to ensure the independence of audit committees from the companies they are auditing. This is achieved by requiring audit committee members to have no affiliation with the company in question other than acting as an independent director. The PCAOB also gives the audit committee full responsibility for the oversight, compensation, and appointment of each auditor. Furthermore, the PCAOB ensures that audit committee members can question and interview company auditors without any corporate leadership present. This is to prevent any undue influence or bias in the auditing process. The PCAOB also mandates that the audit committee creates guidelines to follow if there are complaints about the audit process.