FINANCIAL & MANAGERIAL ACCOUNTING ASSIGNMENT PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD SUBMITTED TO PROFESSOR IDREES SUBMITTED BY MOHSAN

TANVEER ROLL NO.5 MBA(IRM)

MISSION:The PCAOB mission is to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection.

VISION:The PCAOB seeks to be a model regulatory organization. Using innovative and cost-effective tools, the PCAOB aims to improve audit quality, reduce the risks of auditing failures in the U.S. public securities market and promote public trust in both the financial reporting process and auditing profession.

PCAOB History:Jan. 2011 Dec. 2010 Dec. 2010 Oct. 2010 7, James R. Doty is appointed Chairman and Lewis R. Ferguson and Jay D. Hanson are appointed as Board members, replacing Bill Gradison and Charles D. Niemeier Board issues Staff Audit Practice Alert No. 7: Auditor Considerations of Litigation and Other Contingencies Arising from Mortgage and Other Loan Activities Board proposes interim inspection program for brokerdealer audits and broker and dealer funding rules Board issues Consideration of Registration Applications from Public Accounting Firms in Non-U.S. Jurisdictions where there are Unresolved Obstacles to PCAOB Inspections Board issues Report on Observations of PCAOB Inspectors Related to Audit Risk Areas Affected by the Economic Crisis Roundtable: Communications Washington, D.C. with Audit Committees,

20,

14, 7,

Sept. 2010 Sept. 2010 Aug. 2010 Aug. 2010 Aug. 2010 July 2010 June 2010

29,

21, 5, 5, 5, 12,

PCAOB Staff directed to develop proposal to ask Congress to make public disciplinary hearings and related proceedings Board issues Release on Failure to Supervise Board Adopts AS Nos. 8-15: Auditing Standards Related to the Auditor's Assessment of, and Response to, Risk Board issues Staff Audit Practice Alert No. 6: Auditor Considerations Regarding Using the Work of Other Auditors and Engaging Assistants from Outside the Firm U.S. Supreme Court issues decision in case of Free Enterprise Fund v. PCAOB permitting the PCAOB to

28,

continue its operations June 2010 May 2010 April 2010 Feb. 2010 Jan. 2010 Dec. 2009 Sept. 2009 Sept. 2009 Sept. 2009 Aug. 2009 July 2009 June 2009 June 2009 18, 4, 7, 19, 12, Board issues Staff Reporting on Form 2

Questions

and

Answers:

Annual

First Investor Advisory Group meeting Board issues Staff Audit Practice Alert No. 5: Auditor Considerations of Significant Unusual Transactions Board issues Staff Questions and Answers: Auditing Standard No. 7, Engagement Quality Review Board issues Staff Questions and Answers: Special Reporting on Form 3 and Staff Questions and Answers: Succession to Registration Status Form 4 PCAOB establishes an academic fellowship program Board changes effective date of PCAOB rules requiring reporting by registered firms to December 31, 2009 Board issues Report on First Year Implementation of AS No. 5 PCAOB announces members of inaugural Investor Advisory Group Board Member Daniel L. Goelzer is named Acting Chairman, following Chairman Olson's resignation PCAOB adopts AS No. 7: Engagement Quality Review Board adopts rule amendments on the timing of certain nonU.S. inspections Chairman Mark W. Olson announces his resignation

22, 30, 24, 17, 1, 28, 25, 8,

April 2009 Jan. 2009 Dec. 2008 Dec. 2008 Dec. 2008 July 2008 June 2008 June 2008 June 2008 April 2008 Jan. 2008 Dec. 2007 Oct.

21,

Board issues Staff Audit Practice Alert No. 4: Auditor Considerations Regarding Fair Value Measurements, Disclosures, and Other-Than-Temporary Impairments Board issues statement on the PCAOB registration process for auditors of nonpublic broker-dealers Board issues Staff Audit Practice Alert No. 3: Audit Considerations In the Current Economic Environment Board issues Report on the PCAOB's 2004, 2005, 2006, and 2007 Inspections of Domestic Annually Inspected Firms Board adopts rule amendments on the timing of certain nonU.S. inspections Board adopts rules for succeeding to registration status of a predecessor firm Board adopts rules for annual and special reporting by firms Steven B. Harris is appointed to the Board Roundtable: Proposed Policy Statement regarding PCAOB Rule 4012, Washington, D.C. Board adopts new ethics and independence rule concerning communications with audit committees, and amends its existing tax services rule Board adopts AS No. 6: Evaluating Consistency of Financial Statements Board issues Staff Audit Practice Alert No. 2: Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists Board issues Report on the PCAOBs 2004, 2005, and 2006

8, 5, 5, 4, 29, 10, 4, 25, 22,

29, 10,

22,

2007 Sept. 2007 July 2007 May 2007 May 2007 April 2007 Jan. 2007 July 2006 June 2006 June 2006 May 2006 18, 2, 24,

Inspections of Domestic Triennially Inspected Firms

Board Member Kayla J. Gillan announces her resignation Board Member Daniel L. Goelzer is reappointed Board adopts AS No. 5, superseding AS No. 2: An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements Board hosts first International Institute, Washington, D.C. Auditor Regulatory

2, 18, 22,

Board issues Report on the Second-Year Implementation of AS No.2 Board issues Observations on Auditors Implementation of PCAOB Standards Relating to Auditors Responsibilities with Respect to Fraud Board issues Staff Audit Practice Alert No. 1: Matters Relating to Timing and Accounting for Option Grants Board Member Kayla J. Gillan is reappointed Mark W. Olson is appointed Chairman PCAOB/SEC Roundtable: Second-Year Experiences with Internal Control Reporting and Auditing Provisions, Washington, D.C. Board issues Observations on the Initial Implementation of the Process for Addressing Quality Control Criticisms within 12 months after an Inspection Report and The Process for Board Determinations Regarding Firms Efforts to Address Quality Control Criticisms in Inspection Reports

28, 19, 19, 10,

March 21, 2006

Dec. 2005 Nov. 2005

2, 30,

Board Member Bill Gradison is named Acting Chairman, following Chairman McDonoughs resignation Board issues Report on the Initial Implementation of AS No.2: An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements Board adopts AS No. 4: Reporting on Whether a Previously Reported Material Weakness Continues to Exist Board issues Policy Statement Regarding Implementation of AS No. 2: An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements First Forum on Auditing in the Small Business Environment, Costa Mesa, Calif.

July 2005 May 2005

26, 16,

Nov. 2004 Dec. 2004 Aug. 2004 Aug. 2004 July 2004 July 2004 June 2004 June 2004 June

30, 1, 26, 5, 19, 14, 21, 9, 9,

Board issues reports on 2003 limited inspections of Big Four firms Board Member Bill Gradison is reappointed Registration requirement takes effect for non-U.S. audit firms Roundtable: Auditor Independence and Tax Services, Washington, D.C. First Standing Advisory Group meeting Board adopts rules relating to the oversight of non-U.S. audit firms Board adopts AS No. 3: Audit Documentation

2004 March 2004 Dec. 2003 Oct. 2003 Oct. 2003 Oct. 2003 Sept. 2003 Sept. 2003 July 2003 July 2003 June 2003 May 2003 May 2003 April 9, Board adopts AS No. 2: An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements Board adopts AS No. 1: References in Auditors Reports to the Standards of the Public Company Accounting Oversight Board Board Member Charles D. Niemeier is reappointed Registration requirement takes effect for U.S. audit firms of public companies Board adopts inspection rules Board adopts rules on investigations and adjudications Roundtable: Audit Documentation, Washington, D.C. Roundtable: Reporting on Internal Controls, Washington, D.C. Accounting firm registration system is activated online Board adopts rules related to auditing and related professional practice standards as well as advisory groups William J. McDonough is appointed Chairman Board adopts audit firm registration rules PCAOB receives SEC determination, as required by the

17,

23, 22, 7, 29, 29, 29, 17, 30, 21, 6, 25,

2003 April 2003 16,

Sarbanes-Oxley Act, that it is appropriately organized, with the capacity to carry out the Acts requirements Board adopts Standards AICPA standards as Interim Auditing

March 31, 2003 Jan. 2003 Jan. 2003 Jan. 2003 Oct. 2002 July 2002 9, 8, 6, 25,

Roundtable: Non-U.S. Auditor Registration, Washington, D.C. First open board meeting Board Member Charles D. Niemeier is named Acting Chairman Washington, D.C. office opens Founding board members are appointed to staggered terms including: Kayla J. Gillan, Daniel L. Goelzer, Bill Gradison, and Charles D. Niemeier Sarbanes-Oxley Act of 2002 is enacted, establishing the PCAOB

30,

ABOUT PCAOB:The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports. The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection. The Sarbanes-Oxley Act of 2002, which created the PCAOB, required that auditors of U.S. public companies be subject to external and independent oversight for the first time in history. Previously, the profession was self-regulated. The five members of the PCAOB Board, including the Chairman, are appointed to staggered five-year terms by the Securities and Exchange Commission (SEC), after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury. The SEC has oversight authority over the PCAOB, including the approval of the Boards rules, standards, and budget. The Act established funding for PCAOB activities, primarily through annual fees assessed on public companies in proportion to their market capitalization and on brokers and dealers based on their net capital.

THE BOARD:The five members of the Board, including the Chairman, are appointed to staggered five-year terms by the Securities and
10

Exchange Commission, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury.

James R. Doty Chairman since 2011

Lewis H. Ferguson Board Member since 2011

Daniel L. Goelzer Board Member since 2002

Jay D. Hanson Board Member since 2011

Steven B. Harris Board Member since 2008

SENIOR STAFF:PCAOB Management, Program Area, and Operations Leadership

11

Board Offices:Office of the General Counsel and Secretary J. Gordon Seymour Michael Stevenson Barbara B. Hannigan General Counsel and Secretary Deputy General Counsel Ethics Officer and Senior Compliance Counsel

Office of Chief Hearing Officer David M. FitzGerald Board Staff Phoebe W. Brown Karen Dietrich Joanne Hindman O'Rourke Special Counsel to Board Member Daniel L. Goelzer Special Counsel to Board Member Jay D. Hanson Special Advisor to Board Member Steven B. Harris Special Advisor to Chairman James R. Doty Special Advisor to Board Member Lewis H. Ferguson Special Counsel to Chairman James R. Doty Chief Hearing Officer

Steven E. Richards Bella Rivshin Samantha E. Ross Program Areas

Office of the Chief Auditor Martin F. Baumann Jennifer A. Rand Greg Scates Keith Wilson Chief Auditor and Director of Professional Standards Deputy Chief Auditor/Deputy Division Director Deputy Chief Auditor Deputy Chief Auditor 12

Headquarters Washington, D.C. Regional Offices New York New York, N.Y. Boston, Mass. Atlanta Atlanta, Ga. Charlotte, N.C. Miami, Fla. Tampa, Fla. Chicago Chicago, Ill. Detroit, Mich. Minnetonka, Minn. Dallas Irving, Texas Houston, Texas Denver Denver, Colo. Orange County Irvine, Calif. San Franc

13

The PCAOB enforcement staff conducts informal inquiries as well as formal investigations that arise from several sources including:

The PCAOB has authority to investigate and discipline registered public accounting firms and persons associated with those firms for noncompliance with the Sarbanes-Oxley Act of 2002, the rules of the PCAOB and the Securities and Exchange Commission, and other laws, rules, and professional standards governing the audits of public companies, brokers, and dealers. When violations are found, the PCAOB can impose appropriate sanctions. As required by the Sarbanes-Oxley Act, the Boards investigations are confidential and nonpublic. The SarbanesOxley Act also requires that disciplinary proceedings are confidential and nonpublic, unless and until there is a final decision imposing sanctions. Investigations The PCAOB conducts investigations of registered public accounting firms and their associated persons. Board rules require registered public accounting firms and their partners, staff, and contractors to cooperate with Board investigations, which includes producing documents and providing testimony and information. HEARINGS When investigations lead to alleged violations, the PCAOB will provide registered public accounting firms and persons associated with those firms an opportunity for a hearing and, in appropriate cases, impose sanctions designed to deter possible recurrence and enhance the quality and reliability of future audits. Sanctions Sanctions imposed by the PCAOB may include suspension or revocation of a firm's registration, suspension or bar of an individual from associating with a registered public accounting firm, and civil money penalties. The Board may also require improvements in a firms quality control, training, independent monitoring of the audit work of a firm or individual, or other remedial measures.

PCAOB inspections of registered firms PCAOB research and analysis Other regulators Public disclosures of restatements and auditor changes News reports Confidential tips from the public

14

STANDARDS:The PCAOB is directed by the SarbanesOxley Act of 2002 to establish auditing and related professional practice standards for registered public accounting firms to follow in the preparation and issuance of audit reports. Auditing Interim Standards

INTERIM STANDARDS:In April 2003, the Board adopted certain preexisting standards as its interim standards. Pursuant to Rule 3500T, Interim Ethics Standards consist of ethics standards described in the AICPAs Code of Professional Conduct Rule 102, and interpretations and rulings thereunder, as in existence on April 16, 2003, to the extent not superseded or amended by the Board. Pursuant to Rule 3600T, Interim Independence Standards consist of independence standards described in the AICPAs Code of Professional Conduct Rule 101, and interpretations and rulings thereunder, as in existence on April 16, 2003, to the extent not superseded or amended by the Board, and certain standards, and interpretations, of the Independence Standards Board, to the extent not superseded or amended by the Board. In April 2003, the Board adopted certain preexisting standards as its interim standards. Pursuant to Rule 3200T, Interim Auditing Standards consist of generally accepted auditing standards, as described in the AICPA's Auditing Standards Board's Statement of Auditing Standards No. 95, as in existence on April 16, 2003, to the extent not superseded or amended by the Board.

15

QUALITY CONTROL:Attestation Interim Standards In April 2003, the Board adopted certain preexisting standards as its interim standards. Pursuant to Rule 3300T, Interim Attestation Standards consist of the AICPAs Auditing Standards Boards Statements on Standards for Attestation Engagements, related interpretations, and statements of position as in existence on April 16, 2003, to the extent not superseded or amended by the Board. Guidance Staff Audit Practice Alerts Staff Audit Practice Alerts highlight new, emerging, or otherwise noteworthy circumstances that may affect how auditors conduct audits under the existing requirements of PCAOB standards and relevant laws. The statements contained in Staff Audit Practice Alerts are not rules of the Board and do not reflect any Board determination or judgment about the conduct of any particular firm, auditor, or any other person.
Current Standard-Setting and Related Rulemaking Activities TITLE Concept Auditor DOCKET NO. STATUS Release on 037 Independence Comment Period Open EFFECTIVE DATE

16

and Audit Firm Rotation

Due Dec. 14, 2011 Comment Period Closed

Proposed Auditing 036 Standard on Auditing Supplemental Information Accompanying Audited Financial Statements and Related Amendments to PCAOB Standards Proposed Standards for 035 Attestation Engagements Related to Broker and Dealer Compliance or Exemption Reports Required by the U.S. Securities and Exchange Commission and Related Amendments to PCAOB Standards Concept Release on 034 Possible Revisions to PCAOB Standards Related to Reports on Audited Financial Statements and Related Amendments to PCAOB Standards Concept Release on 031 Possible Rulemaking Approaches to Complement Application of Section 105(c)(6) of the Sarbanes-Oxley Act

Comment Period Closed

Comment Period Closed

Comment Period Closed

17

of 2002 Proposed Auditing 030 Standard on Communications with Audit Committees and Related Amendments to Certain PCAOB Auditing Standards Improving Transparency 029 Through Disclosure of Engagement Partner and Certain Other Participants in Audits Proposed Auditing 028 Standard Related to Confirmation and Related Amendments to PCAOB Standards Auditing Standards 026 Related to the Auditor's Assessment of and Response to Risk and Related Amendments to PCAOB Standards Comment Period Closed

Comment Period Open Due Jan. 9, 2012 Comment Period Closed

Approved by SEC

For audits of fiscal years beginning on or after Dec. 15, 2010

Standing Advisory Group The Board convened a Standing Advisory Group (SAG) to advise the PCAOB on the development of auditing and related professional practice standards. The SAG includes auditors, investors, public company executives and others.

18

The SAG meets two or three times a year and is chaired by the Boards Chief Auditor and Director of Professional Standards.

NOMINATION PROCESS On an annual basis, the Board seeks nominations of individuals to serve two-year terms on the SAG. Members are selected by the Board based on the nominations received, including selfnominations, from any person or organization. Appointments are typically announced by the end of October, and the new terms begin in January. Membership in the advisory group is personal to the member, and the duties and responsibilities of the member cannot be delegated to others. Members are subject to certain sections of the Boards Ethics Code, as provided in PCAOB Rule 3700, Advisory Groups.

OBSERVERS:The Board has granted six organizations observer status with speaking rights at SAG meetings:

Auditing Standards Board of the American Institute of Certified Public Accountants Department of Labor Financial Accounting Standards Board Government Accountability Office International Auditing and Assurance Standards Board Securities and Exchange Commission

19