Which of the following services does the PCAOB require auditors of public companies to perform

How the PCAOB was established

The PCAOB was established as part of the Sarbanes-Oxley Act, which required that U.S. public company audits be subject to external and independent oversight. Under Sarbanes-Oxley, accounting firms must register with the PCAOB in order to prepare, issue or participate in audit reports for issuers, brokers and dealers.

Non-U.S. accounting firms that furnish, prepare or play a substantial role in preparing audit reports for any U.S.-based issuer, broker and dealer are also subject to PCAOB rules.

Mission

The PCAOB mission statement "is to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection."

The PCAOB has authority to investigate and discipline registered public accounting firms and persons associated with those firms for noncompliance with Sarbanes-Oxley, Securities and Exchange Commission (SEC) regulations and other standards governing audits of public companies, brokers and dealers. The PCAOB has investigative authority to address serious audit deficiencies at registered firms, and has disciplinary authority to impose sanctions and penalties for those deficiencies.

PCAOB Board

The five members of the PCAOB Board are appointed to staggered five-year terms by the SEC after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury. The SEC has oversight authority over the PCAOB, including the approval of rules, standards and budget. 

A Standing Advisory Group (SAG) and an Investor Advisory Group (IAG) also provide input to the Board on issues related to its work. The SAG is comprised of auditors, investors and public company executives, and advises the PCAOB on the development of auditing and related professional practice standards. The IAG provides advice to the Board on broad policy issues and matters that affect investors.

PCAOB rules

Under the Sarbanes-Oxley Act, the PCAOB is designated to establish auditing and related professional practice standards for registered public accounting firms to follow in the preparation and issuance of audit reports. These PCAOB rules and standards include the following:

• PCAOB standards for auditing
• Ethics and independence rules
• Quality control standards
• Attestation standards

The Sarbanes-Oxley Act requires annual PCAOB inspection reports for firms that regularly provide audit reports for more than 100 issuers, and at least triennially for firms that regularly provide audit reports for 100 or fewer issuers. The Act also directs the PCAOB Board to assess and collect an annual fee from each registered public accounting firm. The fees are used to recover the costs of processing and reviewing annual reports.

PCAOB auditing standards

The PCAOB inspects firms' audit reports, performance of audits, issuance of audit reports, audit logs and other relevant material to ensure regulatory compliance. When violations are found, the PCAOB can impose appropriate sanctions that include suspension or revocation of an auditor's registration, suspension or barring an individual from associating with a registered public accounting firm, and fines. The PCAOB may also require quality control improvements, additional training and independent audit monitoring.

The PCAOB's Office of Research and Analysis is leading a project to identify potential audit quality indicators (AQI), which the PCAOB describes as "a potential portfolio of quantitative measures that may provide new insights about how high quality audits are achieved." The goal of the audit quality indicators is to inform the PCAOB Board's policy and inspection decisions, aid work of other regulators and improve audit firms' quality control processes.