Final answer:
The Public Company Accounting Oversight Board (PCOAB) was created under the Sarbanes-Oxley Act to oversee the audits of public companies, set auditing standards, and enforce compliance. Their role is to protect investors and ensure the accuracy of financial statements.
Step-by-step explanation:
The Public Company Accounting Oversight Board (PCOAB) was created under the Sarbanes-Oxley Act to oversee the audits of public companies in order to protect investors and ensure the accuracy of financial statements. The PCOAB is responsible for setting auditing standards, inspecting and monitoring audit firms, and enforcing compliance with these standards. They also have the authority to discipline auditors and impose sanctions.
For example, if a public company hires an audit firm to review their financial records and certify their accuracy, the PCOAB will inspect and monitor that audit firm to ensure they are performing their duties properly and following the auditing standards set by the board.
The role of the PCOAB is crucial in maintaining confidence in financial information provided by public corporations and enhancing investor protection in the wake of accounting scandals.