Final answer:
The CEO and/or CFO of an entity are responsible for the reliability of internal controls over financial reporting according to the PCAOB. This is while the board of directors oversees corporate governance, and the external auditor reviews financial records.
Step-by-step explanation:
According to the Public Company Accounting Oversight Board (PCAOB), the entity's CEO and/or CFO are responsible for the reliability of the internal controls over financial reporting process of an entity. The board of directors, elected by the shareholders, holds the primary responsibility for corporate governance and oversight for top executives. However, it is specifically the CEO and CFO who are held accountable for the design and operation of internal controls. The auditing firm, on the other hand, reviews the company's financial records and provides a reasonable assurance that the financial statements are free of material misstatements. Outside investors, especially large shareholders, rely on the integrity of the internal controls and the financial information provided by the company to make investment decisions.