The Different Roles Of The Accounting Profession

1. There are several sections to an annual report. The two main sections are the written section from management to shareholders, and the second section is the 10-K. The written section is entirely optional; some companies omit it while others prepare an extensive write-up. There is no set form for this section. Starbucks' 2011 Annual Report has a 4 page write-up with a letter from Howard Schultz and a brief description of the company's business for the past year. The 10-K does have a set form. It includes a five-part discussion of the business; the financial data, which is the largest part of the report; a five-part discussion of relating to governance and the executive and the last part is the exhibits.

There are a number of different reporting requirements that are needed to comply with the SEC. These include the provision of financial statements on a quarterly basis (10-Q) along with an annual report (10-K). These statements must adhere to a specific format that governs how financial statements are prepared, and how the information is presented. There are many sections to these forms that must be included. Moreover, the information must be accurate, and prepared to guidelines laid out in the Generally Accepted

The Financial Accounting Standards Board (FASB) sets the Generally Accepted Accounting Principles in the United States. The FASB Accounting Standards codification implements a system for organizing non-governmental generally accepted

Board (PCAOB). The Sarbanes-Oxley Act was born in 2002 and although it is almost 13

The PCAOB is charged with establishing and enforcing auditing, quality control, ethics and independence standards and rules for public company accountants. The SEC will not accept an audit report from an accounting firm that is not registered with the PCAOB. Thus, SEC reporting companies must engage the services of a registered public accounting firm. The PCAOB is funded by new fees imposed on publicly-traded companies based on their market capitalization – the fees range from as little as $100 for the very smallest companies to more than $1 million for a handful of the largest companies.[4]

The act is also referred to as Sarbox or SOX. The Securities and Exchange Commission (SEC) is responsible for enforcement of the law. The Public Company Accounting Oversight Board (PCAOB) was created as a new auditor through SOX. Standards were stipulated for audit reports.

Section 105 gives PCAOB authority to conduct investigations and obtain all relevant information. PCAOB also has the power to suspend auditors, revoke the registration of the accounting firms and impose penalties for violations or unwilling to corporate with an investigation (Philipp, CPA, & CGMA, 2014). Section 106 regulates foreign public accounting firms providing an audit report to an issuer and requires them to comply with PCAOB requests (Philipp, CPA, & CGMA, 2014). Section 107 gives SEC oversight and enforcement authority over the PCAOB and its decisions (Philipp, CPA, & CGMA, 2014). This prevents PCAOB from gaining too much power over accounting regulation. Section 108 amends the Securities Act of 1933 to allow the SEC to have the authority to establish accounting standards, to adopt accounting standards established by a standard setting body that meets certain qualifications, such as the FASB. Section 109 calls for funding of the PCAOB and the designated accounting standard-setting body (FASB) to be funded from fees imposed upon public companies (Philipp, CPA, & CGMA,

On July 30, 2002, The Sarbanes-Oxley Act of 2002 (SOX) was signed into law by President Bush. "The Act mandated some reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud" (SEC.Gov. 2013 P. 1). The SOX Act also created the Public Company Accounting Oversight Board (PCAOB) in response to numerous failures of the profession to fulfill its trusted role; to oversee the activities of the auditing profession (SEC.Gov, 2013. The auditing of financial statements is required for the protection of public investors; however the question that arises is whether or not all PCAOB members should be taken from the investments communities that use audited financial statements. The remaining of this

The Sarbanes-Oxley Act, is an act passed by U.S. Congress on July 30, 2002. The primary reason was to protect investors from the possibility of fraudulent accounting activities by corporations. The act is commonly known as SOX Act. The act is named after its cosponsors, U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. The Sarbanes Oxley Act is arranged into eleven titles. They are Public Company Accounting Oversight Board (PCAOB), Auditor Independence, Corporate Responsibility, Enhanced Financial Disclosures, Analyst Conflicts of Interest, Commission Resources and Authority, White Collar Crime Penalty Enhancement, Corporate Tax Returns, and Corporate Fraud Accountability. These titles provide the description of specific requirements and mandates for the financial reporting. The SOX Act monitors compliance through various sections. However, the most significant sections are 302 (Disclosure controls), 401 (Disclosures in periodic reports), 404 (Assessment of internal control), 802 (Criminal penalties for influencing US Agency investigation/proper administration). As a result of SOX Act, the top management must individually certify the accuracy of financial information. The Act increased the oversight role of board of directors and the independence of the outside

There were several large scandals in the beginning years of the 2000’s. The public had a lack of trust within the capital markets and investors who had invested their capital would soon find out that they had lost a substantial amount, as share prices decreased. Senator Paul Sarbanes and Representative Michael Oxley both came together and were part of creating legislation which would deter future scandals such as Enron, WorldCom, Tyco amongst other frauds that led the public lose trust in the markets- to never happen again. Sarbanes-Oxley Act of 2002 is comprised of 11 sections, and one of them is the creation of the (PCAOB) Public Company Accounting Oversight Board, PCAOB definition “The PCAOB is a nonprofit

The provisions of the act apply, not only, to U.S. companies that are required to file annual reports with the Securities and Exchange Commission (SEC), but also to foreign companies that are listed in the U.S. or obligated to report to the SEC periodically. Title I of the Sarbanes-Oxley Act stipulates that a new Public Company Accounting Oversight Board (PCAOB) will be appointed and overseen by the SEC. The PCAOB board consists of five full-time members who are

“Sarbanes-Oxley Act of 2002” mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession” (U.S. Securities and Exchange Comissions).

The Sarbanes-Oxley Act consists of 11 titles that set significant requirements and consequences for non-compliance in terms of transparency of financial reporting and accountability of leadership for publicly held companies. The Act established the Public Company Accounting Oversight Board (PCAOB), which is an independent, nongovernmental and non-profit organization created to oversee the audits of public companies. The Act also set requirements for the audit committee, the CEO and CFO in regards to certifying financial statements, prohibits loans to executive officers, require real-time disclosure of information, changed the deadline for insiders to report trading in company 's securities to within two business days of the transaction, provides for the protection of whistleblowers, and imposes sanctions and penalties on violators of the provisions of the Act (“Corporate scandals, the Sarbanes-Oxley Act of 2002 and equity prices,” 2007, p. 83). All of these provisions are used to help improve accuracy and reliability of corporate disclosures by ensuring transparency, neutrality, and accountability in reporting financials, in order to protect investors.

After major corporate and accounting scandals like those that affected Tyco, Worldcom and Enron the Federal government passed a law known as the Sarbanes-Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act. This law was passed in hopes of thwarting illegal and misleading acts by financial reporters and putting a stop to the decline of public trust in accounting and reporting practices. Two important topics covered in Sarbanes-Oxley are auditor independence and the reporting and assessment of internal controls under section 404.

According to PCAOB (2015), “the Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by the Sarbanes-Oxley Act. The Board is composed of five members appointed by the Securities and Exchange Commission. It was modeled on private self-regulatory organizations in the securities industry—such as the New York Stock Exchange—that investigate and discipline their own members subject to Commission oversight. Unlike these organizations, the Board is a Government-created entity with expansive powers to govern an entire industry.”