...independence of the independent registered public accounting firm and the performance of the Company’s internal audit services function; (iii) the integrity of the Company’s systems of internal accounting and financial controls; (iv) legal and regulatory compliance; (v) the assessment and management of the Company’s risk and capital; and (vi) the performance of the other Committee functions set forth in this charter. In discharging its responsibilities, the Committee is not itself responsible for planning or conducting audits or for any determination that the Company’s financial statements and disclosures are complete and accurate or are in accordance with generally accepted accounting principles and applicable rules and regulations. This is the responsibility of the Company’s management and the independent registered public accounting firm. In addition, the Company’s management is responsible for managing its risk function and for reporting on its processes and assessments with respect to the Company’s management of risk. Organization and Certain Responsibilities The Committee shall be comprised of at least three directors. The members of the Committee shall be appointed by the Board and shall meet the independence, experience and expertise requirements of the New York Stock Exchange listing rules and other applicable laws and regulations. No member of the Committee shall simultaneously serve on the audit committees of more than two other public companies. The Committee shall...
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...Act PUBLIC LAW 107–204—JULY 30, 2002 116 STAT. 745 Public Law 107–204 107th Congress An Act To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. July 30, 2002 [H.R. 3763] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Sarbanes-Oxley SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the ‘‘SarbanesOxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 101. Establishment; administrative provisions. 102. Registration with the Board. 103. Auditing, quality control, and independence standards and rules. 104. Inspections of registered public accounting firms. 105. Investigations and disciplinary proceedings. 106. Foreign public accounting firms. 107. Commission oversight of the Board. 108. Accounting standards. 109. Funding. 201. 202. 203. 204. 205. 206. 207. 208. 209. 301. 302. 303. 304. 305. 306. 307. 308. TITLE II—AUDITOR INDEPENDENCE Services outside the scope of practice of auditors. Preapproval requirements. Audit partner rotation. Auditor reports to audit...
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...PUBLIC LAW 107–204—JULY 30, 2002 116 STAT. 745 Public Law 107–204 107th Congress An Act To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. July 30, 2002 [H.R. 3763] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Sarbanes-Oxley SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the ‘‘SarbanesOxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD 101. Establishment; administrative provisions. 102. Registration with the Board. 103. Auditing, quality control, and independence standards and rules. 104. Inspections of registered public accounting firms. 105. Investigations and disciplinary proceedings. 106. Foreign public accounting firms. 107. Commission oversight of the Board. 108. Accounting standards. 109. Funding. 201. 202. 203. 204. 205. 206. 207. 208. 209. 301. 302. 303. 304. 305. 306. 307. 308. TITLE II—AUDITOR INDEPENDENCE Services outside the scope of practice of auditors. Preapproval requirements. Audit partner rotation. Auditor reports to audit committees...
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...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). Until recently, an accounting firm was required only to provide information current as of the initial registration date for the firm. Beginning on December 31, 2009, accounting firms were required to register with the PCAOB and file annual and current reports with the PCAOB. On August 13, 2009, the SEC approved the proposed rules with the original effective date of October 12, 2009, but on September 30, 2009, the PCAOB delayed the effective date to December 31, 2009. These parts implement the requirements of SOX section 102(d) that registered public accounting firms 1) report annual information about the firms and their audit practices, and 2) submit, as specified by the PCAOB or the SEC, more frequent information necessary to update the information previously filed with the PCAOB. Until now, the PCAOB had no requirement for annual reports or amendments to report material changes in initial registration information. The purposes of the new sections are 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...
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...How is the Sarbanes-Oxley Act likely to affect the accuracy of public company financial statements and the cost of capital for public companies? SOX The Sarbanes-Oxley Act (SOX) was signed into law in 2002 by President Bush. The law was put in place to increase corporate responsibility and enhance financial disclosures; therefore, reducing and preventing accounting fraud. SOX also created the Public Company Accounting Oversight Board (PCAOB). What is PCAOB? PCAOB oversee activities that take place in the profession of auditing. This corporation protects investors as well as those of the public. PCAOB assures that the preparation of information is true and accurate. They also micromanage audits from broker-dealers, including compliance reports filed in accordance to federal security laws; which also promotes investor protection. 103 Regulation of Audit Firms Section 103 of the Sarbanes-Oxley Act of 2002 charges the PCAOB with creating auditing and other related standards for registered public accounting firms when preparing audits. It also authorizes the Board to create any rules it deems necessary to ensure auditor independence. Section 103 also requires the Board to create expert advisory groups so as to help in setting these standards and help in creating the process and procedures used to create the standards. The Board has convened a Standing Advisory Group (SAG) which advises the Board on the establishment of auditing and related professional practice standards...
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...116 STAT. 748 PUBLIC LAW 107–204—JULY 30, 2002 (i) shares in the profits of, or receives compensation in any other form from, that firm; or (ii) participates as agent or otherwise on behalf of such accounting firm in any activity of that firm. (B) EXEMPTIONAUTHORITY.—The Board may, by rule, exempt persons engaged only in ministerial tasks from the definition in subparagraph (A), to the extent that the Board determines that any such exemption is consistent with the purposes of this Act, the public interest, or the protection of investors. (10) PROFESSIONALSTANDARDS.—The term ‘‘professional standards’’ means— (A) accounting principles that are— (i) established by the standard setting body described in section 19(b) of the Securities Act of 1933, as amended by this Act, or prescribed by the Commission under section 19(a) of that Act (15 U.S.C. 17a(s)) or section 13(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78a(m)); and (ii) relevant to audit reports for particular issuers, or dealt with in the quality control system of a particular registered public accounting firm; and (B) auditing standards, standards for attestation engagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board or the Commission determines— (i) relate to the preparation or issuance of audit reports for issuers; and (ii) are established or adopted by the Board under section 103(a), or are promulgated...
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...relative to practice of accounting 2. The Legislature finds and declares that it is the policy of this State, and the purpose of this act, to promote the reliability of information that is used for guidance in financial transactions or for accounting for or assessing the financial status or performance of commercial, noncommercial, and governmental enterprises. The public interest requires that persons preparing financial statements accompanied by reports or professing special competence in accountancy or offering assurance as to the reliability or fairness of presentation of such information shall have demonstrated their qualifications to do so, and that persons who have not demonstrated and maintained those qualifications, including license holders not in public practice, shall not be permitted to hold themselves out as having that special competence or to offer that assurance; that the professional conduct of persons licensed as having special competence in accountancy be regulated in all aspects of the practice of public accountancy; that a public authority competent to prescribe and assess the qualifications and to regulate the professional conduct of practitioners of public accountancy be established; and the use of titles relating to the practice of public accountancy that are likely to mislead the public as to the status or competence of the persons using those titles be prohibited. L.1997,c.259,s.2. 45:2B-44 Definitions relative to the practice of accounting. 3. As used in this...
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...Introduction High-profile accounting scandals of recent decades have seriously undermined the confidence in the capital markets and resulted in unprecedented losses, affecting both large and small investors. Scandals that erupted in the largest U.S. companies as Enron, Tyco and WorldCom, have reduced the overall confidence in the capital market and had a devastating impact on pension assets. As a result, on July 30, 2002, Congress passed the Sarbanes-Oxley Act, creating the radical changes affecting the practice and regulation of accounting and auditing. Evaluation of effectiveness of regulations such as SOX over minimizing the corporate fraud and protecting investors and suggestion for improvement After the scandals, the public was demanding accountability from those who run corporations. It turned out that investors and stakeholders are vulnerable to corporate fraud and highly exposed to the risks of investment losses. Therefore, the Sarbanes-Oxley Act designed to protect the interests of the investing public and reduce their exposure to investment losses as a result of managerial fraud. Act introduced significant legislative changes to existing financial practices and announced a new corporate governance rules. The main objectives of these legislations are protection of investors and shareholders from fraudulent activities of the management as well as building confidence in the financial statements of public companies. The provisions of the Act dramatically changed the relationship...
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...Abstract This paper discusses the role and function of the Public Company Accounting Oversight Board (PCAOB) and Auditing Standard 5 (AS 5). Due to the increased demand for oversight in auditing standards, this paper also examines the impact of Sarbanes-Oxley (SOX) and the reasons for the creation of the PCAOB, as well as the implementation of the rules and regulations. Additionally, this paper examines the impact of AS 5. Keywords: audit, AS 5, financial statements, PCAOB, SEC, SOX Table of Contents Introduction ………….……………………………………………………..……………………4 Scandals ...…..……………………………………...……………………………………………4 PCAOB Mission and Vision …………………… ……………………………………………….5 Structure ………………………….……………..……………………………………………5, 6 PCAOB's Objective….…….……..…………………………………………………………….6, 7 Duties ………………………….…..………………………………………………….……… 7, 8 Standard Setting………..………………………………………………………………..……..…8 Inspection ………………………………………………………………………………………..8 Enforcement…………..………………………………………………………………..……...8, 9 AS5 .…………………….…………………………………………………...…………….…9, 10 Conclusion………………………………………………………………………….....……. 10 References …………………………………………………………………………………….. 11 History of PCAOB …………………………………………………………………… 13-19 Introduction Sarbanes-Oxley (SOX) was passed in 2002 and as a result brought numerous changes to auditing. The Sarbanes-Oxley was passed in direct response to business failures, allegations of corporate improprieties and financial statement restatements. Prior to the SOX passage, auditors used a...
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...Commission (SEC) Public Company Accounting Oversight Board (PCAOB) Independent Audit Firm Audit Committee of the Corporate Board of Directors Internal Audit Function Internal Control System Corporate Governance & Financial Reporting U.S. Securities & Exchange Commission (SEC ) Public Company Accounting Oversight Board (PCAOB) Independent Audit Firm Corporate Board Of Directors Audit Committee CEO & CFO Internal Audit Function Internal Control System The U.S. Securities & Exchange Commission (SEC) The mission of the SEC is to protect investors, maintain orderly and efficient financial markets, and facilitate capital formation. The laws and rules governing the securities industry derive from a straightforward concept: all investors, large or small, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. Therefore the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to judge for themselves whether to buy, sell, or hold a particular security. For more visit: http://www.sec.gov/about/whatwedo.shtml Public Company Accounting Oversight Board (PCAOB) The PCAOB is a private, nonprofit corporation created by the Sarbanes-Oxley Act of 2002, under the oversight of the SEC, to supervise the auditors of public companies. The PCAOB was created to protect investors and the public interest...
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...Amazon.com 1. Provide answers to the following questions about the 10K filing by reading/searching the document. a. What is the purpose? The purpose of 10K is to comprehensively summarize a company’s financial performance and help investors have a better understanding about the company’s state of operation. b. When is it filed? 1/31/2014 c. What financial statements are included in the 10K? • Report of Ernst & Young LLP, Independent Registered Public Accounting Firm • Consolidated Statements of Cash Flows • Consolidated Statements of Operations • Consolidated Statements of Comprehensive Income • Consolidated Balance Sheets • Consolidated Statements of Stockholders’ Equity d. Identify each note (e.g., Note 1), its associated title (e.g., Summary of Significant Accounting Policies) and the purpose of the note in the section titled “Notes to Consolidated Financial Statements.” [You may do this in a table format.] NO. Title Purpose Note 1 Description of business and accounting policies Presenting a broad company profile and briefly summarized the accounting policies used by the enterprise. Note 2 Cash, Cash equivalents, and marketable securities Company’s cash,cash equivalents, and marketable securities measured at fair value on a recurring basis and categorized using the fairvalue hierarchy are summarized by major security type. Note 3 Property and equipment This note briefly summarized the cost and depreciation expense of major property and equipment. Note...
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...CFO's Of Public Companies Section 204 Sarbanes-Oxley Act (SOX) mandates that the public accounting firms, or auditors hired by a publicly traded companies will report to an Audit Committee that serves on the Board of Directors of that company. Also, this section outlines the information that the auditors will have to report to the Audit Committee such as, accounting policies and practices used by the company, alternative accounting policies for the disclosure of financial information that has been discussed with management, and the ramifications of such alternatives, and the accounting policies that the accounting firm recommends. Additionally, the accounting firm must report all written communications between the firm and management that includes the schedule of unadjusted differences. Section 301 outlines the corporate responsibilities of Public Company Audit Committees, and outlines that oversight that this committee will have over registered public accounting firms that are retained to perform an audit of company financial statements to ensure that they are providing the correct information on the SEC filings, also referred to as Assurance of Compliance (Public Law 107–204, 2002). The public accounting firms will report directly to the audit committee, and this committee will sets procedures for how resolution disagreements that arise between the auditors and management if discrepancies are found in the financial reporting while conducting the audit report will be handled...
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...CHAPTER 1 The Role of the Public Accountant in the American Economy Review Questions 1–1 The “crisis of credibility” largely arose from the number of companies that restated their previously issued financial statements as a result of accounting irregularities and fraud. Especially responsible were the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted the largest companies in American history to do so. The extent of the accounting irregularities and fraud being investigated and disclosed brought into question the effectiveness of financial statement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of destroying documents related to the Enron case brought into question the ethical standards of the profession. 1–2 Assurance services are professional services that enhance the quality of information, or its context, for decision making. The two types are: (a) those that increase the reliability of information and (b) those that involve putting information in a form or context that facilitates decision making. 1–3 A financial statement audit is, by far, the most common type of attest engagement. The overall assertion, made by management, most frequently is that the financial statements follow generally accepted accounting principles. 1–4 A large corporation with securities listed on a stock exchange is required by the rules of the stock...
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...Public Company Accounting Oversight Board Otis K Scales III LAW/531 December 14, 2015 Prof. Demond Philson Public Company Accounting Oversight Board The Public Company Accounting Oversight Board (PCAOB) was “created as a part of the Sarbanes-Oxley Act of 2002 (SOX), which requires United States public company audits to be subject to external and independent oversight” ("What Is PCAOB?", 2013). Accounting firms must register with PCAOB to take part in audit reports for dealers, issuers and brokers. Non-U.S. accounting firms that participate in any aspect of auditing reports are subject to the PCAOB rules and regulations as well. The PCAOB has the authority to “investigate and discipline registered public accounting firms and persons associated with those firms for noncompliance with the SOX, Security Exchange Commission (SEC), and other standards” ("What Is PCAOB?", 2013). The PCAOB has four distinctive functions; registration, inspection, setting standards and enforcement of those standards. Creation and Work of the PCAOB When it comes to the creation and work of the PCAOB, one need to think of just how each registered accounting firm and individual now must comply with the standards set forth by the PCAOB. Prior to the creation of the PCAOB, many of the accounting firms were self-regulated and often paid a sizable fee for nonaudit consultations from companies such as Enron, WorldCom and Tyco, just to name a few (Rouse, 2015). Previously...
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...and increased regulation in order to restore confidence in the securities market and to provide reliable and accurate information for investors. The Sarbanes Oxley Act of 2002 was a large stepping stone in that movement and has impacted many public companies. SOX requires public companies registered with the Securities Exchange Commission to evaluate the effectiveness of its internal control over financial reporting and disclose this information in its financial statements. For instance, Dell Inc., a large multinational IT corporation, was one of the many large corporations affected by the implications of SOX. First, Section 404 of SOX requires Dell’s management, under the supervision of the CEO and CFO, to establish and maintain adequate internal control in accordance with the rules defined in the Securities Exchange Act. In addition to establishing the controls, they are also required to evaluate the effectiveness of the controls against the criteria established in the Internal Control-Integrated Framework issued by COSO. Second, Section 409 of SOX requires management to disclose material changes in internal control, and the results or potential effects of those changes. Finally, Section 404 of SOX requires Dell’s auditing firm to evaluate management’s assessment of Dell’s internal control and to issue an opinion on the quality and accuracy of the assessment. All in all, SOX raised corporate responsibility to assess and improve internal control over financial reporting...
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