Video: Introduction to PCAOB and SEC Requirements

This lesson provides an overview of the roles and responsibilities of the PCAOB (Public Company Accounting Oversight Board) and SEC (U.S. Securities and Exchange Commission) within the context of auditing financial statements. The background and creation of these agencies, as well as their objectives to protect investor interests and ensure accurate and independent reporting, are discussed. The relationship between the PCAOB and SEC is also explained, emphasizing that all PCAOB rules and standards must be approved by the SEC. Additionally, the lesson briefly touches upon the auditing of broker dealers and how CPA firms must be registered with the PCAOB to audit clients registered with the SEC.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Let's give some nice background to the PCAOB, SEC, Sarbanes-Oxley, all of these wonderful organizations and acts and federal regulations. Let's give some background to what we're going to see here throughout this whole lesson. First off, the U.S. Securities and Exchange Commission, also known as the SEC. It's an independent agency of the federal government created in the aftermath of the Wall Street crash of 1929. Some of you may be familiar with it as they're kind of regulators of the stock market. And why are they? Well, securities, securities are stocks, securities can be debt and exchanging them, exchanging those securities. That is what the SEC does. They enforce the law against market manipulation. And how does that play a role with what we're doing? Well, we audit financial statements for these publicly traded companies and the stock of those companies is, those are securities. Next up, we have the PCAOB. In a way, the public version of the AICPA, definitely different and have their own places. And a lot of times we have to follow both rules if we're doing public companies. But the PCAOB, the Public Company Accounting Oversight Board, it's a nonprofit corporation created by the Sarbanes-Oxley Act, which we'll see on the next slide, oversee the audits of public companies and other issuers in order to protect the interests of investors. No fraud, trying to prevent that fraud happening and further the public interest in the preparation of informative, accurate, and independent audit reports. The extra regulation, and I'll talk about kind of the history of why that's important, not that you'll need to answer questions in the history, but it just gives some nice background. You'll also see it on BEC, so kind of killing two birds with one stone. Nice to give

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