Who is PCAOB?
One of the most well-known regulatory committees in the accounting world is the PCAOB. The Public Company Accounting Oversight Board, or PCAOB, is a non-profit corporation established by Congress to inspect the auditing of public companies. PCAOB’s role is to ensure the interests of investors and the public in the preparation of accurate, informative, and independent audit reports. The Board also closely scrutinizes the auditing of broker-dealers, which includes compliance reports filed in accordance with federal securities laws.
The PCAOB was created in 2002 with the establishment of the Sarbanes-Oxley Act of 2002, which, for the first time in US history, required that auditors of US public companies be subject to independent and external oversight. Before the creation of the Board, the profession was self-regulated.
PCAOB consists of 5 members, 1 of whom is the chairman. Members are appointed to staggered 5-year terms and are overseen by the Securities and Exchange Commission (SEC). PCAOB aims to be a model regulatory organization that uses cost-effective and innovative tools. Their goal is to reduce risks of auditing failures across the country, improve audit quality, and promote trust in the auditing profession and financial reporting process.
PCAOB in the Press
Recent proposals to change the threshold for corporate disclosures has seen PCAOB’s public profile heightened. MarketWatch reports that these proposals will severely restrict auditors’ oversight capabilities, ultimately limiting their ability to force disclosures that lawyers and management delete.
Members of PCAOB have voiced their concerns about these controversial proposals from the accounting standards setter, also known as the Financial Accounting Standards Board (FASB). The proposed changes will affect the threshold for corporate disclosure and define materiality as a legal concept that will be interpreted by courts, instead of being defined as an accounting concept.
PCAOB director Martin Bauman claims that the proposal will effectively change the relationship between the audit committee and the auditor, as it is currently mandated by law. Other attorneys and the council agree. The proposal from FASB could negatively impact investor confidence in financial reporting. It also contradicts set standards for the auditors of public companies.
Many are wondering why there is a need for such a change. According to a letter from FASB, it may be because audit committees are feeling overworked. Others have agreed that this action from FASB seems like an overreaction.
DMS Can Help
An integrated document management system can help companies stay on the right side of oversight boards like the PCAOB. Paperless storage solutions offer an efficient filing system that takes up less space and is easily searchable; but more to the point, an effective document management software (DMS) system can help businesses create searchable audit trails and enhance security.
A powerful DMS like eFileCabinet also offers solutions like SecureDrawer, which allows companies to share files through a client-sharing portal. Role-based security allows management to restrict employee and client access to information based on designated roles—some may be given access to accounting documents, for example, while others may be given access to HR documents. Role-based security provides the safety and security that the PCAOB requires.
eFileCabinet also provides audit trails to keep track of the users who access, delete, rename, or change files. These audit trails can’t be deleted and allow boards such as the PCAOB a transparent view of your businesses practices, smoothing the audit and audit inspection process. In addition, eFileCabinet is compliant with SEC regulations.
Remote Audit Capability
eFileCabinet also offers Enterprise Access, a powerful tool that allows corporate access to satellite or remote offices from any location. This is especially convenient for large companies with multiple branches and offices. Key to our discussion here, Enterprise Access affords corporations remote audit capabilities, which saves costs in travel and time by eliminating invasive site visits, while keeping your company SEC and FINRA compliant.
Enterprise Access is an affordable and flexible tool that gives a Corporate Administrator the ability to designate which employees are granted access. Offices contacted through satellite do not have the ability to alter permissions, but can still maintain private file cabinets that can’t be viewed by corporate. Remote offices can also utilize eFileCabinet’s DMS for their paperless office needs. And most importantly, audits can be approved without disrupting business flow.
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