| All Certified Public Accountants (CPA’s), in the US | | | | investigate and discipline any firms and CPA’s |
| and foreign, that provides audited financial statements | | | | whom are in violation of specific laws or standards. All |
| for public companies registered with the SEC | | | | firms and CPA’s are still required to have peer |
| (Securities and Exchange Commission) must be | | | | review of their auditing and accounting practice in |
| registered with the Public Company Accounting | | | | order to satisfy the American Institute of Certified |
| Oversight Board (PCAOB), sometimes referred to as | | | | Public Accountants (AICPA) membership, federal |
| Peekaboo. The PCAOB is a private-sector, nonprofit | | | | regulatory (Generally Accepted Auditing Standards) |
| corporation that was created by the Sarbanes-Oxley | | | | and/or state licensing requirements. There are currently |
| Act of 2002 which is under the jurisdiction of the SEC. | | | | over 2,000 public firms registered with the PCAOB, |
| The Sarbanes-Oxley Act and the creation of the | | | | with more pending registration. A list of current and |
| PCAOB were a result of the accounting fraud | | | | pending registered firms can be found on the PCAOB |
| scandals of Enron and WorldCom. | | | | website. |
| Only Certified Public Accountants (CPA's) can | | | | The PCAOB currently has pending a requirement that |
| prepare audited financial statements on behalf of a | | | | all registered firms and CPA’s submit an annual |
| business or non-profit organization. In order for a | | | | report on Form 2, provided on the PCAOB website, by |
| non-certified accountant to become a CPA, the | | | | June 30th, except for those firms and CPA’s that |
| accountant needs to work for an accounting firm for a | | | | have been registered between April 1st and June 30th |
| few years, acquire five hundred hours of auditing time, | | | | of that year. Also they will be required to pay an |
| and pass a test from the American Institute of | | | | annual fee to the PCAOB by July 31st. As these |
| Certified Public Accountants as well as from their | | | | requirements are still pending approval, the annual |
| state. A CPA also must take 120 hours of continuing | | | | report and fees are not required for the 2009 calendar |
| education courses every three years to maintain their | | | | year deadlines. In these reports the registered |
| license. | | | | CPA’s must provide various information for the |
| The purpose of the Public Company Accounting | | | | year including: audited financial statement reports |
| Oversight Board is to oversee auditors, (accounting | | | | issued during the year; disciplinary history of any |
| firms, CPA’s, accountants) of public companies in | | | | accountants that joined the firm during the year; a |
| order to protect the interests of investors and further | | | | break down of the fees for services provided to all |
| the public interest in the preparation of informative, fair, | | | | clients during the year, showing the percentage of the |
| and independent audited financial statements. The | | | | fees billed to public audit clients for audit services, other |
| PCAOB’s goal is to improve the quality of audited | | | | accounting services, tax services, and non-audit |
| financial statements, reduce the risk of auditing failures, | | | | services. The PCAOB also requires registered |
| and increase public trust in financial reporting | | | | CPA’s to submit special reports on Form 3 within |
| processes and of the auditing profession. The PCAOB | | | | 30 days of the occurrence of the special event. Such |
| has established auditing, quality control, ethics, and | | | | special events include change of name or contact |
| independence standards to be used by registered | | | | information, withdrawal of an audited financial |
| public accounting firms and CPA’s in the | | | | statement by an auditor if the client did not report |
| preparation of audited financial statements for publicly | | | | withdrawal in the 8-K filing with the SEC, and if legal, |
| traded companies, as required by the Sarbanes-Oxley | | | | administrative, or disciplinary action have been taken |
| Act of 2002 and the rules of the Securities and | | | | again the firm or its related accountants. These |
| Exchange Commission (SEC). | | | | reports, along with reports from the PCAOB on its |
| The Sarbanes-Oxley Act of 2002 requires the | | | | inspections of public company audits will be available to |
| PCAOB to: register all accounting firms, CPA’s, and | | | | the public on their website. |
| accountants that audit public companies; inspect all | | | | It is the responsibility of the registered CPA’s that |
| registered firms and CPA’s annually for those who | | | | audit financial statements for public companies to |
| annually audit over 100 public companies and a | | | | provide accurate and independent reports. By following |
| minimum of once every three years for those that | | | | the rules and regulations of the PCAOB, AICPA, and |
| audit under 100, assess the degree to which the firms | | | | GAAP, registered CPA’s can provide the highest |
| and CPA’s comply with the act, the rules of the | | | | quality of audited financial statements that fairly and |
| PCAOB and the SEC, professional standards in | | | | accurately represent the public company, detect |
| connection with the performance and issuance of | | | | material misstatements and false or missing |
| audited financial statements and attest services; | | | | information caused by fraud, and protect the interest |
| related matters involving public companies, and | | | | of investors. |