Which function of the PCAOB is most vital to the integrity of financial reporting within public companies in the U.S.?

PCAOB Research Paper – 3,500 Words MINIMUM Background: In regulating the public accounting industry in the United States the Public Company Accounting Oversight Board (PCAOB) serves three major functions: (1) setting auditing standards, (2) inspecting registered public accounting firms and (3) enforcing auditing standards. In this assignment, you will perform extensive research on each function and answer the question below. Research Question: Based on your research, which function of the PCAOB is most vital to the integrity of financial reporting within public companies in the U.S.? • Introduction (5 Points): See the accompanying outlining guide. Be sure to ANSWER THE RESEARCH QUESTION CLEARLY AND CONCISELY. • Resources and questions that will assist you in analyzing the STANDARD SETTING process (30 Points): o http://pcaobus.org/Standards/Pages/CurrentStatus.aspx o Read the PDF file on blackboard describing the process so you have a broad understanding of what you are talking about. Where does it begin? Who initiates it? Who are all of the players involved? How long does the standard take to be adopted (from concept release to final adoption of the standard)? Review several recently adopted standards to get an understanding of how it works, and feel free to cite them if it helps your argument/discussion. o Think about strengths and/or weaknesses in the process. For example, if one of the recently adopted standards you examined took 5 years between concept release and adoption, is this efficient and/or effective? Are there enough eyes on the standards being adopted? Are the standard setters held accountable to the public’s opinion? Does the public have any say? Do the board members seem reactive to the public’s concerns? • Resources and questions that will assist you in analyzing the INSPECTIONS process (30 Points): o The following link(s) will help you obtain an understanding of the PCAOB inspection process.  https://pcaobus.org/Inspections/Pages/Remediation_Process.aspx  https://pcaobus.org/Inspections/Documents/2006_03-21_Release_104-2006-077.pdf o Use the link to see the list of firms that did not remediate the errors found by the PCAOB within the 12-month time frame. Read through a few reports that have been issued in the last 5 years.  https://pcaobus.org/Inspections/Reports/Pages/FirmsFailedToAddressQCSatisfactorily.aspx o Take note of common failures noted in the reports. Which audit standards have not been followed? Are they associated with complex accounting areas? Does it seem like the same errors have continued to emerge over the 5-year period you examined? What does this mean for the effectiveness of PCAOB’s inspection process? Do the firms seem to care that the findings go public? Is this enough of an incentive to force them to perform quality audits? • Resources and questions that will assist you in analyzing the ENFORCEMENT process (30 Points): o Link to PCAOB information on Enforcement Activities. This page has A LOT of information on the process and recent enforcements:  http://pcaobus.org/Enforcement/Pages/default.aspx o List of recently settled enforcement actions  https://pcaobus.org/Enforcement/Decisions/Pages/default.aspx o Bylaws related to investigations and adjudications – types of penalties begin at rule 5300 under “Sanctions.”  https://pcaobus.org//Rules/Pages/Section_5.aspx o Are the penalties imposed sufficient? Are firms discouraged from not following the PCAOB audit standards? • Conclusion (5 Points): See the accompanying outlining guide. Be sure to restate your position, and provide a brief summary of what you discussed in the body paragraphs of the paper. Other Helpful Links: PCAOB Quality Control Standards: https://pcaobus.org/Standards/QC/Pages/default.aspx PCAOB Audit Standards: https://pcaobus.org/Standards/Auditing/Pages/PreReorgStandards.aspx PCAOB Recent or in progress standards: http://pcaobus.org/Standards/Pages/CurrentStatus.aspx Formatting • Length: This assignment must be a minimum of 3,500 words (Not to exceed 4,500 words). You will receive a ZERO if your assignment is not at least 3,500 words. Headings and section titles WILL NOT be included in your word count. • Margins: 1” (Left justification ONLY). • Font: Times New Roman, 12 point. • Headings and Subheadings: Please use them as appropriate. • Page Numbers: At the bottom of your page, with the first page of your writing holding the first page number. • APA Format Citations: There are numerous resources online that you can find in order to properly cite any outside information. Other Instructions • Do not use lists, bullet points, contractions or the second person (e.g., “you”) in your writing. • Use passive voice sparingly. References (APA Format) • You must provide proper citations for all references used to avoid plagiarism. Any direct quotes must be indicated as such. NOTE: Wikipedia.com and blogs do NOT count as references. • A wealth of excellent resources exists at your disposal. I encourage you to use popular and business press articles (New York Times, Wall Street Journal, Financial Times, Business Week, The Economist, etc.) practitioner journals (Journal of Accountancy, CPA Journal, Accounting Today, etc.) and academic journals (The Accounting Review, Accounting Horizons, Auditing, etc.) to inform your research. You have access to these and many more through George Mason University’s Library website. • You should follow https://owl.english.purdue.edu/owl/resource/560/01/ for APA formatting. However, a cover page and abstract are NOT required for this assignment. • You should review a sample APA formatted paper to ensure that you have formatted your paper appropriately. Please visit https://owl.english.purdue.edu/owl/resource/560/18/ for a sample APA paper. Remember, you must submit a paper that is unique to this class. If you have written about this topic in a prior class, you must write a completely new paper. Students who want additional help with their writing should visit one of the writing center locations on campus. Visit http://writingcenter.gmu.edu for more information. Students can also email or set up an appointment with our writing fellow, Adrianne Morris. Her email is amorri15@gmu.edu