Functions and Mandates of Regulatory Bodies in Accounting and Audit Practices Term Paper

Excerpt from Term Paper :

Regulatory and Compliance

Auditors, consultants and security professional owe to their clients stakeholders a duty of care in the performance of their duties. The duty of care requires these professionals to observe prudence in all circumstances regarding their actions and evaluations (Boynton & Johnson, 2006).

Contribution of the PCAOB towards Independence of Auditors of Public Companies

It is sometimes ignored the contributions made by PCAOB towards improving corporate governance in public companies by generating better focus upon accounting and audit practices. A series of failures in the various functions of a public corporation to protect the investing interest of public corporations contributed the creation and enactment of Sarbanes-Oxley Act (SOX). Despite there being criticisms against the effects of PCAOB the board has contributed towards a higher degree of professionalism on public corporation auditors. An Important contribution of the board towards this independence is through the assertion that the audit companies should be subject to the securities law and concerned matters. Thus, the audit company is not likely to conspire with the corporation's directors to misrepresent facts in accounting and auditing reports. This requirement protects the investors' interest by ensuring resultant audit reports are accurate, informative and independent. Should the auditing company make any attempts to misrepresent information on behalf of the corporation, it is then liable as a company and not as an agent of the corporation. The independence in action prompts audit company to undertake their duties with due diligence and fully accountable to the regulatory board and the legal repercussions.

Formulation ad composition of the PCAOB board members

The PCAOB is a nonprofit corporation that serves to oversee the public investors interests through the formulation of accounting and auditing standards (Kimmel, Weygrandt, & Kieso, 2012). The corporation is charged with the obligation of registering public accounting audit firms, an inspection of public accounting and audit firms, setting standards for accounting and audit, and investigation and enforcement (Farrell, 2006). Given the duties assigned to the board and the need to ensure public investor confidence, it is necessary that the board's composition is of persons who have an understanding of the regulations in auditing and accounting standards. The board members ought to also comprehend what they need to deliver to ensure public confidence. In this perspective, it is only reasonable that the board members be drawn from firms that are credited for the use of the audited financial statement.

With the board composition comprising…

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