Read SEC Clears Accounting Watchdog\'s Budget but Flags Spending by: Dave Michae
ID: 2758547 • Letter: R
Question
Read SEC Clears Accounting Watchdog's Budget but Flags Spending by: Dave Michaels in the Mar 15, 2016 issue of the Wall Street Journal (available online March 14) and answer the following questions. What is the PCAOB? What is its purpose? When was it created and why? What is the SEC? How is it related to the PCAOB? How is the PCAOB funded? Why was this funding model established? Should it be funded differently? Please offer reasons to support your answer. What complaints does the SEC have about the PCAOB? What can the PCAOB do to address these complaints? Are the SEC's views reasonable? Why or why not?Explanation / Answer
1. PCAOB stands for public company accounting oversight board, is established to construct policies for biggest U.S accounting firms. It was created to overcome the accounting scandals that occur in large organizations, hence PCAOB is an organization that which was established to audit public companies and safeguard investors as well as public interest. PCAOB was created in the year 2002 on the basis of sarbanes-oxeley act of 2002.
2. SEC stands for securities and exchange commission. PCAOB is monitered by two members of SEC for which PCAOB pays more than $540,000 a year for its board members. Thus the activities of PCAOB are well monitored by SEC members.
3.PCAOB is funded by SEC in way of compensations through which it could identify possible savings and efficiencies. As all the activities of PCAOB are monitored by SEC, the process of funding and its management by SEC is an optimum technique of funding.
4.PCAOB has hired consultants from outside in view of speed up its standards and agenda settings, the pay for outside consultants is higher of which SEC currently is bearing for its members. This has got a big concern for SEC from PCAOB side, however the views of SEC are reasonable in this case and hence PCAOB needs to address its complaints through federal.
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