Final answer:
The Public Company Accounting Oversight Board (PCAOB) is the organization responsible for registering, inspecting, and disciplining auditors of publicly owned companies, created as a result of the Sarbanes-Oxley Act of 2002.
Step-by-step explanation:
The organization that has the authority to register, inspect, and discipline auditors of all publicly owned companies is the Public Company Accounting Oversight Board (PCAOB). The PCAOB was established by the Sarbanes-Oxley Act of 2002 in response to major accounting scandals involving corporations such as Enron and WorldCom. This regulatory authority is tasked with protecting investors and the public interest by ensuring that the audits of public companies are conducted with rigor and integrity.
Congress drafted the Sarbanes-Oxley Act to increase confidence in financial information provided by public corporations and to safeguard investors from accounting fraud. The PCAOB plays a critical role in enforcing these standards by overseeing the audits of public companies, which includes not only the registration and regular inspection of auditing firms but also the ability to impose discipline when necessary.
Audit firms play a fundamental role in corporate governance by reviewing company's financial records and certifying their reliability. However, as seen in the failure of corporate governance with Lehman Brothers, investor confidence necessitates robust regulatory oversight, a role filled by the PCAOB.