Post Enron Changes in Accounting Firms
Major changes in rules and regulations
Since the Enron collapsed an array of new laws and regulations has been adopted to tighten corporate oversight. US offices were the first one to come out and implement the policies. Almost all of the firms had their headquarters in the US and they replicated their headquarters policies to a good extend in other offices around the world. Also other governments and regulatory bodies around the world came out with their country specific rules and regulations which are quite similar to the rules in the US. So these two factors ensured that rules which are followed in US are followed at the other places also. Policies might differ in their length and breadth at different places due to cultural, country specific factors and the size of member firms but conceptually they are pretty much the same.
The main change being the Sarbanes-Oxley Act, which did two things. First, it created the Public Company Accounting Oversight Board (PCAOB), which is in charge of registering and inspecting public accounting firms, and for adopting and modifying audit standards. Second, the PCAOB has the power to bring enforcement actions, which, is concurrent with the SEC’s [Securities and Exchange Commission] enforcement powers. Second, the Act does what critics would call a micromanaging of corporate governance by establishing some very specific requirements of corporations. SOX require the CEO and CFO to sign all the financial statements, to have an understanding of the workings of the companies that they head and to affirm the fact that they don’t know of any fraud being committed by the company.
The GAO (Government Accounting Office) implemented laws revolving around four major areas corporate governance, independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues.
The AICPA requires auditors to document all decisions or judgments that are of a significant degree. SAS outlines what
Since the Enron collapsed an array of new laws and regulations has been adopted to tighten corporate oversight. US offices were the first one to come out and implement the policies. Almost all of the firms had their headquarters in the US and they replicated their headquarters policies to a good extend in other offices around the world. Also other governments and regulatory bodies around the world came out with their country specific rules and regulations which are quite similar to the rules in the US. So these two factors ensured that rules which are followed in US are followed at the other places also. Policies might differ in their length and breadth at different places due to cultural, country specific factors and the size of member firms but conceptually they are pretty much the same.
The main change being the Sarbanes-Oxley Act, which did two things. First, it created the Public Company Accounting Oversight Board (PCAOB), which is in charge of registering and inspecting public accounting firms, and for adopting and modifying audit standards. Second, the PCAOB has the power to bring enforcement actions, which, is concurrent with the SEC’s [Securities and Exchange Commission] enforcement powers. Second, the Act does what critics would call a micromanaging of corporate governance by establishing some very specific requirements of corporations. SOX require the CEO and CFO to sign all the financial statements, to have an understanding of the workings of the companies that they head and to affirm the fact that they don’t know of any fraud being committed by the company.
The GAO (Government Accounting Office) implemented laws revolving around four major areas corporate governance, independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues.
The AICPA requires auditors to document all decisions or judgments that are of a significant degree. SAS outlines what