Functions and Mandates of Regulatory Bodies in Accounting and Audit Practices

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 of a member from investment companies that uses audited financial statements, it is easy to develop articulate accounting and auditing standards. The practicing members of the board will facilitate effective means of coming up with regulatory measures that reflect appropriate measures of assessing accounts and audit report and evaluating the accounting and auditing reports. The existent conflict between the board and practicing auditors and accountants is likely to be resolved following from existent of a board that understands the accounting practice and regulations (Donna, 2010).

On inspection and evaluation of the audit firms and their subsequent registration as public corporation accounting and auditing firms, the board will operate with efficiency with a composition of persons in the accounting field. A fair understanding of the accounting and auditing practice serves to elevate the regulatory efficiency through fair and extensive measures of evaluation. It is also easy for the accredited public corporation accounting and auditor firms to embrace the regulator's activities and relate to the set standards on a professional level.

Public confidence will be restored in the PCAOB board and its activities with the composition of the board coming from the investment community that uses audited statements. More assurances to the public will come from the performance of public corporations whose financial statements would reflect articulate utilization of the investors (Greiling, 2006). The public corporation investors would rest assured that the measures implemented by the board are ideal for safeguarding their investments. It would also ensure that the corporations directors are acting in their best interests by implementing the approved accounting standards in a bid to receive desirable audit report qualifications.