What is the role of the Public Company Accounting Oversight Board (PCAOB)?

The role of the Public Company Accounting Oversight Board (PCAOB) is primarily to determine auditing standards and review the performance of auditing firms. Established as a result of the Sarbanes-Oxley Act in 2002, the PCAOB aims to protect the interests of investors and further the public good by fostering informative, fair, and independent audit reports. It sets rigorous standards for auditors of public companies to ensure high-quality audits, which are critical for maintaining trust in the financial reporting and the overall capital markets.

This function involves not only establishing standards for auditing practices but also inspecting the audits conducted by registered public accounting firms to ensure compliance with these standards. The oversight provided by the PCAOB is a fundamental aspect of enhancing transparency and accountability in the financial reporting process, ultimately promoting investor confidence and market stability.