Guide to the New PCAOB Reporting Requirements
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1) Using at least three (3) recent credible sources:
2) Justify how the reporting requirements of the PCAOB reduce the chance of financial fraud.
3) Illustrate the responsibilities of an auditing firm to detect fraud during the audit process.
4) Recommend alternatives to the PCAOB.
5) Prepare a sample timeline for PCAOB reporting.
The specific course learning outcomes associated with this assignment are:
- Examine different types of organizational illegal activities, including cybercrimes and the impact to the organization.
- Use technology and information resources to research issues in forensic accounting.
- Write clearly and concisely about forensic accounting issues using proper writing mechanics.
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Solution Summary
This solution provides a practical guide to the new PCAOB reporting requirements.
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Introduction:
The Public Company Accounting Oversight Board aims at protecting investors by promoting accurate, informative and independent audit reports. Congress established PCAOB in order to oversee audit carried out on public companies (PCAOB, 2011). The board is responsible for setting standards that auditors should comply with while auditing and also in audit reporting. PCAOB (2011) provides that the Sarbanes Oxley Act of 2002 created the board and also required auditors to be subject to oversight by an external and independent body. Through the Sarbanes Oxley Act, requires accounting firms involved in preparing and issuing audit reports in the United States to be registered with the Public Company Accounting Oversight Board (Berger, 2010).
How the reporting requirements of the PCAOB reduce the chance of financial fraud:
PCAOB reporting requirements emphasize on increased disclosure in financial reporting whereby the board provides information that should be reflected in financial statements and also by providing management and auditor responsibilities in financial reporting. By providing standards and duties that should be followed in financial reporting, PCAOB is able to reduce fraud in financial reporting and ensure that an investor receives accurate financial information.
Section 404 of the Sarbanes Oxley Act requires the management of a company to assess and report on internal controls during financial reporting and also the auditor is required to assess internal controls to ensure effectiveness (Financial Advice from PCAOB, 2005). This requirement leads to increase internal controls in company financial reporting therefore minimizing chances of fraud in reporting and ensures that information contained in financial reports is true and accurate.
The PCAOB provides reportable events in financial statements thus ensuring that all transactions that affect a company's financial position are provided in financial statements thus ensuring accuracy and avoids fraud required transactions are reflected in financial reports. The Sarbanes Oxley provides significant changes in financial position should be disclosed ...
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