TABLE OF CONTENTS Corporate governance and leadership have new rules and guidelines as the result of the creation of the Public Company Accounting Oversight Board (PCAOB) under Section 103 of the Sarbanes-Oxley Act. This is making corporations play by new rules. Auditors are finding out that accounting and auditing standards can no longer be self-directed. When the founding members of the PCAOB were appointed on October 25, 2002, it marked the end of self-regulation and compulsory oversight. These changes have had a sweeping and profound impact on businesses and the accounting profession. Even more changes are expected as the impact of the legislation filters down to privately held companies and their auditors. Right now, we have big generally accepted accounting principles (GAAP) and little GAAP. One wonders how long it will be before we have just GAAP.
Investors' confidence could not have been restored without the aid of the new legislation. Too many executives and accounting professionals were shading the black-and-white rules with their own self-interested interpretations. In many ways, the new Sarbanes-Oxley rules and standards will create better managed companies because they force executives and accountants to start focusing on the basics and the details. In addition to creating a framework for better business processes, higher standards for leadership ethics and morality have been returned to the business society. Both executives and accounting professionals have now been brought back to what they should have been doing in the first place.
While the PCAOB is an accounting oversight board,...
