The Public Company Accounting Oversight Board: national and international implications

Abstract

Purpose – To investigate some unanswered questions and issues relating to the Public Company Accounting Oversight Board (PCAOB) and to consider the implications of this rule making model that was created in an environment of corporate financial collapses for a jurisdiction without such an environment. Methodology – This paper uses text analysis by the authors as a basis for commentary and opinion on the need for and reaction to The Sarbanes-Oxley Act 2002 (SOX). It is a pragmatic approach to issues which the authors feel has not been sufficiently considered. Findings – It is clear to the authors that significant questions arise with the creation of a regulatory framework designed with public perception in mind. The issues have been in existence long before the passage of SOX. There are more questions than answers at this stage, particularly in light of the international implications of SOX. Practical implications – Changes in the practice of auditing and reporting issues for all companies that sell shares in US markets will be affected. New Zealand is provided as an example of the implications for international convergence of PCAOB like regulation boards that may be created as an alternative framework to the current self-regulation of auditors. Much consideration should be given to the implications of the new regulatory framework before its imposition on jurisdictions where the environment does not call for such “drastic” change. Originality/value – Much has been written on the PCAOB, but without consideration necessarily of the international implications. In particular, the tensions facing small countries such as New Zealand have not been discussed, which seek to be part of the international community of capital markets. This paper seeks to fill some of these gaps.