Info 1: Public Company Accounting Oversight definition
Info 2: how the Public Company Accounting Oversight Board works
Info 3: Public corporations (PCAOB) vs Broker-dealers (PCAOB)
Info 4: example of Public Company Accounting Oversight Board
Opening information:
The Public Company Accounting Oversight Board occupied four matters Public, company, accounting, and oversight board. Public means society, company means firm, accounting means tracking the financial matter, and oversight board means committee that overlooks something.
A Public Company Accounting Oversight Board is a committee that oversees the financial statements of society firms. So now let’s have a look at what is a PCAOB, how the PCAOB works, and what is the difference between public Corporations (PCAOBs) and Broker-dealers (PCAOB), finally one brief example of PCAOB.
Info 1: Public Company Accounting Oversight definition
Whenever any of the students who take the exam based on what their test is to qualify them as a master of one skill, they need to follow the rules created by the government and exam ruler of such schools academics.
Financial statements which are taken and recorded by the auditors using the accountants based on the general accounting principle must qualify the rules and standards that are imposed by the accounting oversight board.
If it doesn’t match accordance to the audit principles and rules of law such audits and accountants are not qualified based on the Accounting Oversight Board.
This same concept applies to all countries’ public businesses in the stock market, so let’s dive into how the Public Company Accounting Oversight Board is involved in the public market.
Info 2: how public Company Accounting Oversight Board works
PCAOB doesn’t represent any of the specific things or objects, instead, it’s a non-profit organization that works as a ruler or checker to oversee the audit financial report of the public companies.
Public Corporations means it’s occupied all kinds and types of Industries that have been trading publicly in any concerned niche.
However, this firm main purpose relies on maintaining and protecting the investor’s trust worth of all audit reports that are submitted to the Security and Exchange Commission.
If any of the companies missus and lack proof or find any fake informative statement, the person who missus the audit and breaks the federal law would charged fines of about 100,000 dollars. And the independent auditors or firm who finalized the audit would need to pay more than 2 million dollars in fines.
None of the public Industry would perform the whole audit and submit such reports to the Security and Exchange Commission (SEC) because according to the rules of the SEC, each of the market participants of a public Corporation must perform the audit with an externally authorized Certified public audit accountant or firm.
Public businesses are allowed to do the rough audit using their business auditor before doing the audit work with an independent auditor person or organization.
Public Company Accounting Oversight Board (PCAOB) members are directly appointed members by the Security and Exchange Commission with confirmation of the Federal Reserve and its treasury system.
Each of the audits that are created and issued to the Investor must need to adherence to the standard of PCAOB audit requirements. The company which issues more than a hundred reports a year would inspected each year by the PCAOB.
Most people are confused that PCAOB only rules the equity public Corporations, so let’s jump into the key difference in it anyway.
Info 3: Public corporations (PCAOB) vs Broker-dealers (PCAOB)
The main purpose relies on inspecting the audit reports that are issued in the public market, which that audit reports are checked for those who are registered with the Security and Exchange Commission (SEC).
so no matter what who would file the audit report and submit it to the Security and Exchange Commission (SEC), it could be a dealer broker, Investment bank, or individual company. all of them are tracked and inspected by the PCAOB.
To make more clear about the PCAOB, let’s look at one brief example below.
Info 4: example of Public Company Accounting Oversight Board
Say company H is a tech industry and issues audit reports of more than 130, which all the files of the audit are performed by using independent auditors.
It’s submitted to the SEC at each term, but such audits are notified by the SEC before any Investor’s notice and also inspected by one nonprofit organization firm.
Company U is a stock broker that submits the audit report to the SEC and is also inspected by the accounting board which is appointed by the SEC.
Here the firm that works as a non-profit organization to perform the inspection for any kind of audit is called a Public Company Accounting Oversight Board.