Sarbanes-Oxley Act: A Legislative Law to Win Public Trust in American Financial Industry

The PCAOB has established auditing, quality control, ethics, and independence standards to be used by registered public accounting firms in the preparation of audited financial statements for publicly traded companies, as required by the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission (SEC).

The Sarbanes-Oxley Act of 2002 requires the PCAOB to: register accounting firms that audit publicly companies,; inspect registered accounting firms and their associated Certified Public Accountants (CPA's) annually for those whom annually audit over 100 public companies and a minimum of once every three years for those that audit under 100, assess the degree to which the firms comply with the act, the rules of the PCAOB and the SEC, professional standards in connection with the performance and issuance of audited financial statements and attest services; related matters involving public companies, and investigate and discipline any accounting firms and related accountants who are in violation of specific laws or standards. There are currently over 2,000 public accounting firms registered with the PCAOB, with more pending registration.

The Public Company Accounting Oversight Board's goal is to improve the quality of audited financial statements, reduce the risk of auditing failures, and increase public trust in financial reporting processes and of the auditing profession. To do this the PCAOB regularly issues reports detailing its inspections of public company audits.

What is the PCAOB For Audited Financial Statements?

Known as the Public Company Accounting Reform and Investor Protection Act of 2002 the Act was authored by Senator Paul Sarbanes and Representative Michael G. Oxley in response to the series of scandals concerning corporate financial agencies.The Sarbanes-Oxley Act is a legislative law designed and implemented to help enhance the policies and standards of U.S. public corporate and financial establishment firms.