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Posts Tagged ‘Accounting’

PCAOB

The Public Company Accounting Oversight Board (PCAOB), sometimes referred to as Peekaboo, is a private-sector, nonprofit corporation that was created by the Sarbanes-Oxley Act of 2002.

The PCAOB is under the jurisdiction of the SEC (Securities and Exchange Commission). The Sarbanes-Oxley Act and the creation of the PCAOB was a direct result of the accounting fraud scandals of Enron and WorldCom. The purpose of the PCAOB is to oversee auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audited financial statements. This was the first time that public companies were required to have audits on the effectiveness of their internal control over corporate financial reporting. The PCAOB has established auditing, quality control, ethics, and independence standards to be used by registered public accounting firms in the preparation of audited financial statements for publicly traded companies, as required by the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission (SEC).

The Sarbanes-Oxley Act of 2002 requires the PCAOB to: register accounting firms that audit publicly companies,; inspect registered accounting firms and their associated Certified Public Accountants (CPA’s) annually for those whom annually audit over 100 public companies and a minimum of once every three years for those that audit under 100, assess the degree to which the firms comply with the act, the rules of the PCAOB and the SEC, professional standards in connection with the performance and issuance of audited financial statements and attest services; related matters involving public companies, and investigate and discipline any accounting firms and related accountants who are in violation of specific laws or standards. All firms are still required to have peer review of their auditing and accounting practice in order to satisfy the American Institute of Certified Public Accountants (AICPA) membership, federal regulatory (Generally Accepted Auditing Standards) and/or state licensing requirements. There are currently over 2,000 public accounting firms registered with the PCAOB, with more pending registration. A list of current and pending registered firms can be found on the PCAOB website.

The PCAOB currently has pending a requirement that all registered firms submit an annual report on Form 2, provided on the PCAOB website, by June 30th, except for those firms that have been registered between April 1st and June 30th of that year. Also they will be required to pay an annual fee to the PCAOB by July 31st. As these requirements are still pending approval, the annual report and fees are not required for the 2009 calendar year deadlines. In these reports the registered firms must provide various information for the year including: audited financial statement reports issued during the year; disciplinary history of any accountants that joined the firm during the year; a break down of the fees for services provided to all clients during the year, showing the percentage of the fees billed to public audit clients for audit services, other accounting services, tax services, and non-audit services. The PCAOB also requires registered firms to submit special reports on Form 3 within 30 days of the occurrence of the special event. Such special events include change of name or contact information, withdrawal of an audited financial statement by an auditor if the client did not report withdrawal in the 8-K filing with the SEC, and if legal, administrative, or disciplinary action have been taken again the firm or its related accountants. These reports, along with reports from the PCAOB on its inspections of public company audits will be available to the public on their website.

The Public Company Accounting Oversight Board’s goal is to improve the quality of audited financial statements, reduce the risk of auditing failures, and increase public trust in financial reporting processes and of the auditing profession. To do this the PCAOB regularly issues reports detailing its inspections of public company audits. One of their main concerns resulting from their inspections is to refocus and remind auditors of the standards required of them regarding fraud and for them to be diligent about their responsibilities relating to fraud. One of the main purposes of audited financial statements is to detect material misstatements and false or missing information caused by fraud.

‘Accounting for a Better Life’ is a book in which John Passmore proposes a new, simplified and fun approach, to home and personal bookkeeping and accounting.

The new methods, based on what he calls, domestic well-being accounting, enable people to gain control of their personal and domestic, financial affairs. The system provides the necessary visibility so that users will know exactly what their money is being spent on, and how well balanced their spending is, in relation to its distribution.

The balance is across basic domestic needs and responsibilities, discretionary spending on holidays, leisure and entertainment, and provision for future well-being. Knowing about the current and past spending patterns, users can determine where and by how much, changes might be needed. Budgeting and associated feedback, facilitate the monitoring of such financial planning.

The author believes the new methods have the potential to be adopted as a formal, sub-discipline of business accounting, eventually perhaps, with suitable certificates and diplomas for those who learn how to use it successfully.

With such recognition, the motivation for appropriate investment from industry and the state becomes real, so that domestic accounting, its further calibration and an associated training infrastructure, can all be further developed and refined.

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There are many different careers in the field of accounting ranging from entry-level bookkeeping to the Chief Financial Officer of a company. To achieve positions with more responsibility and higher salaries, it’s necessary to have a degree in accounting as well as achieve various professional designations.

One of the primary milestones in any accountant’s career is to become a Certified Public Accountant or CPA. To become a CPA you have to go to college with a major in accounting. You also have to pass a national CPA exam. There’s also some employment experience required in a CPA firm. This is generally one to two years, although this varies from state to state. Once you satisfy all those requirements, you get a certificate that designates you as a CPA and you’re allowed to offer your services to the public.

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So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis?

Well, one thing they do that’s terribly important to everyone working there is Payroll. All the salaries and taxes earned and paid by every employee every pay period have to be recorded. The payroll department has to ensure that the appropriate federal, state and local taxes are being deducted. The pay stub attached to your paycheck records these taxes. They usually include income tax, social security taxes pous employment taxes that have to be paid to federal and state government. Other deductions include personal ones, such as for retirement, vacation, sick pay or medical benefits. It’s a critical function. Some companies have their own payroll departments; others outsource it to specialists.

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