Who regulates accounting firms?

Regulation of Accounting Firms

The accounting profession is subject to various governing bodies and regulations to ensure the accuracy, reliability, and ethical conduct of its practitioners. These organizations play crucial roles in overseeing the activities of accounting firms and maintaining the integrity of the profession.

Public Company Accounting Oversight Board (PCAOB)

The PCAOB is a non-profit corporation established by Congress to oversee the audits of public companies and brokers and dealers registered with the Securities and Exchange Commission (SEC). Its primary responsibilities include:

• Registering public accounting firms that prepare audit reports for issuers and SEC-registered brokers and dealers.
• Establishing auditing and related attestation, quality control, ethics, and independence standards.
• Inspecting registered public accounting firms’ audits and quality control systems.
• Investigating and disciplining registered public accounting firms and their associated persons for violations of specified laws, rules, or professional standards.

State Boards of Accountancy

Accountants are primarily regulated at the state level. Each state, along with the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands, has its own board of accountancy. These boards coordinate through the National Association of State Boards of Accountancy (NASBA) to maintain consistency while respecting state autonomy. State boards of accountancy are responsible for:

• Establishing education and experience requirements for CPA licensure.
• Administering the CPA exam.
• Issuing and renewing CPA licenses.
• Enforcing ethical and professional conduct standards for CPAs.

Financial Accounting Standards Board (FASB)

The FASB is an independent, non-profit organization responsible for establishing financial accounting standards for non-governmental entities in the United States, under the authority of the SEC. The FASB develops and issues accounting standards that guide companies in preparing their financial statements. These standards aim to ensure consistency, transparency, and comparability in financial reporting.

American Institute of Certified Public Accountants (AICPA)

The AICPA is a professional organization that provides guidance and sets ethical standards for certified public accountants (CPAs) in the United States. It also works closely with state boards of accountancy to develop and maintain CPA licensure requirements. The AICPA offers continuing education programs, professional development resources, and advocacy for the accounting profession.

International Accounting Standards Board (IASB)

The IASB is an independent agency that establishes international accounting standards. It is the worldwide counterpart of the FASB and is responsible for the International Financial Reporting Standards (IFRS). IFRS are used by companies in over 140 countries and aim to promote global consistency and transparency in financial reporting.

References:

• PCAOB: About
• Chron: Governing Bodies & Rules of the Accounting Profession
• AICPA: Overview of the CPA Profession

FAQs

Who regulates accounting firms that audit public companies in the United States?

The Public Company Accounting Oversight Board (PCAOB) regulates accounting firms that audit public companies and brokers and dealers registered with the Securities and Exchange Commission (SEC).

Who regulates accounting firms at the state level?

State boards of accountancy regulate accounting firms at the state level. Each state has its own board that is responsible for issuing and renewing CPA licenses, enforcing ethical and professional conduct standards, and investigating complaints against CPAs.

What is the role of the Financial Accounting Standards Board (FASB)?

The FASB is an independent, non-profit organization that establishes financial accounting standards for non-governmental entities in the United States. These standards guide companies in preparing their financial statements to ensure consistency, transparency, and comparability in financial reporting.

What is the role of the American Institute of Certified Public Accountants (AICPA)?

The AICPA is a professional organization that provides guidance and sets ethical standards for certified public accountants (CPAs) in the United States. It also works closely with state boards of accountancy to develop and maintain CPA licensure requirements.

What is the role of the International Accounting Standards Board (IASB)?

The IASB is an independent agency that establishes international accounting standards. These standards, known as International Financial Reporting Standards (IFRS), are used by companies in over 140 countries to promote global consistency and transparency in financial reporting.

What are the main responsibilities of the PCAOB?

The PCAOB’s main responsibilities include registering public accounting firms, establishing auditing and related standards, inspecting registered firms’ audits and quality control systems, and investigating and disciplining firms for violations of specified laws, rules, or professional standards.

What are the main responsibilities of state boards of accountancy?

State boards of accountancy are responsible for establishing education and experience requirements for CPA licensure, administering the CPA exam, issuing and renewing CPA licenses, and enforcing ethical and professional conduct standards for CPAs.

What are the main responsibilities of the FASB?

The FASB’s main responsibilities include developing and issuing accounting standards that guide companies in preparing their financial statements, conducting research and analysis on accounting issues, and working with other standard-setting bodies to promote global convergence of accounting standards.