PCAOB
The Public Company Accounting Oversight Board, which sets and enforces auditing standards for firms auditing US public companies.
What is PCAOB?
The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation created by the Sarbanes-Oxley Act of 2002 to oversee auditors of public companies and SEC-registered broker-dealers. Before SOX, the accounting profession was largely self-regulated. The PCAOB registers public accounting firms, sets auditing and related professional practice standards, inspects registered firms' audit work, and investigates and disciplines violators. All audit firms that audit SEC-registered companies must register with the PCAOB. The PCAOB operates under SEC oversight and its standards (AS — Auditing Standards) are legally enforceable. Inspections reveal whether audit firms are properly applying professional standards, and inspection findings are made public.
Example
After a PCAOB inspection revealed deficiencies in KPMG's audit work — including instances where audit teams failed to gather sufficient evidence — the PCAOB issued public findings and required KPMG to remediate its quality control systems. In more severe cases, the PCAOB has imposed significant fines and barred individual auditors from working with public companies, providing a deterrent that did not exist before SOX.
Source: PCAOB — About the PCAOB