The Public Company Accounting Oversight Board (PCAOB) is non-profit organisation. The aim in creating the body was to oversee the audit of public companies. Ultimately protection of investors, through improvements in the reports of audits.

You may ask, “Why do we need yet more red tape?” The names of three companies is all the answer needed:- Enron, WorldCom and Arthur Anderson. They have become bywords for abuses in corporate governance.

Created under the Sarbanes-Oxley Act of 2002, the PACOB is the new watchdog.

The job of creating and even overseeing, the PCAOB was passed to the Security and Exchange Commission (SEC). It has to be noted that many of the powers granted to the new body already existed for the SEC.

The board has 5 members. Independence is required of the members from the accounting firms they are regulating. The SEC however has ultimate control. For instance over sanctions that the PCAOB can impose or rules it wants to set.

The Act was signed by George Bush in July 2002 and has been in operation since then.

Ensuring audit accuracy by companies is not the PCAOBs only job. They also have an ongoing regulatory duty which applies through the whole financial reporting process.

Initially the Sarbanes-Oxley Act only applied to US companies. However all companies which wished to offer their stock in American markets like the New York Stock Exchange (NYSE) were required to comply.

Dutie of the PCAOB are to

1) Register public accounting firms

2) Conduct inspections of public accounting firms

3) Conduct investigations of accounting firms and if necessary apply sanctions.

4) Establish or adopt auditing quality control, ethics and other standards.

5) Promote high professional standards and improve audit quality.

6) Enforce compliance of the Boards rules, standards and securities laws in relation to auditing.

7)Oversee the Boards budget.