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comprehensively discuss the SEC, PCSOB, SOX, FASB, GAAS, and the AICPA. Include the Securites Act of...

comprehensively discuss the SEC, PCSOB, SOX, FASB, GAAS, and the AICPA.

Include the Securites Act of 1933 and 1934
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SEC

The SEC has congressional authority from the original Securities Acts of 1933 and 1934 to establish accounting and auditing standards for publicly traded companies; however, in the past the SEC has largely delegated this authority to other bodies, including the FASB and the AICPA’s Auditing Standards Board. The Sarbanes ­Oxley Act of 2002 gave the SEC the mandate to actively regulate the public accounting profession by establishing and overseeing the PCAOB and its standard­setting process relating to the audits of public companies. The SEC has authority to implement and oversee standards relating to all aspects of the audits of public companies, including standards relating to auditor independence. The documents most frequently encountered by auditors under the Securities Exchange Act of 1934 are forms 10-K, 10-Q, and 8-K. Forms 10-K and 10-Q are, respectively, annual and quarterly reports, which include the audited financial statements periodically filed with the SEC by a publicly traded entity. An 8-K is filed whenever a significant event occurs which may be of interest to investors, such as a change of independent auditors.

PCSOB

The PCSOB is a quasi­-governmental organization overseen by the SEC. It was formed to provide governmental regulation of the standards used in conducting public company audits because of a perceived failure of the profession to adequately regulate itself.

SOX

During the late 1990s and early 2000s, accounting firms aggressively sought opportunities to expand their business in nonaudit services such as consulting. This expansion from their core audit practice, combined with allegations of auditors refusing to challenge management’s actions, resulted in conflict between regulators and the accounting profession. Subsequent financial fiascos such as those at Enron, WorldCom, Tyco, and many others caused investors to doubt the fundamental integrity of the financial reporting system. Under pressure to restore the public’s confidence, Congress passed the SarbanesOxley Act and created the PCAOB in 2002.

The accounting profession’s expansion into new areas, combined with changes in the overall business environment, resulted in new regulations and guidelines. The scandals of the late 1990s and early 2000s brought into question the profession’s ability to selfregulate, resulting in new legislation. While these changes have caused pain and turmoil, they highlight the essential importance of auditing in our economic system. Ultimately, the “back to basics” emphasis, along with auditing firms’ renewed focus on thorough and effective financial statement audits, will likely prove healthy for the U.S. financial reporting system and for the profession. Further, somewhat ironically, the SOX-mandated audit of internal control over financial reporting has brought significant new revenues to accounting firms.

FASB​​​​​​​

The Financial Accounting Standards Board (FASB) is a private, non-profit organization standard-setting body[1] whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the US. The FASB replaced the American Institute of Certified Public Accountants' (AICPA) Accounting Principles Board (APB) on July 1, 1973.

GAAS

The four categories of Principles Underlying an Audit Conducted in Accordance with GAAS are the purpose and premise of an audit, personal responsibilities of the auditor, auditor actions in performing the audit, and reporting. The Principles Underlying an Audit include all of the key concepts conveyed in the 10 GAAS, but do so in a more organized and coherent manner. They also address other key concepts that are not addressed in the 10 GAAS, such as explicitly identifying the fundamental purpose of an audit and management’s responsibilities

GAAS is composed of three categories of standards: general standards, standards of field work, and standards of reporting. The ten GAAS and the SAS are minimum standards of performance because circumstances of individual engagements may require the auditor to perform audit work beyond that specified in GAAS and the SAS in order to appropriately issue an opinion that a set of financial statements is fairly presented.

AICPA

The AICPA issues the following standards:
 Statements on Auditing Standards

 Statements on Standards for Attestation Engagements

 Statements on Standards for Accounting and Review Services

 Statements on Quality Control Standards

 Standards for Performing and Reporting on Peer Reviews

 Statements on Standards for Consulting Services

 Statements on Standards for Tax Services


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