PCAOB
November 17, 2009
Martin F. Baumann
Chief Auditor, Office of the Chief Auditor
Caveat
The views I express are my own and do not
necessarily reflect the views of the Board,
individual Board members, or other
members of the Board’s staff.
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Overview of PCAOB
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Created by the Sarbanes-Oxley Act of 2002 to
oversee the auditors of public companies in
order to protect investors and the public
interest by promoting informative, fair, and
independent audit reports.

The Act required that auditors of U.S. public
companies be subject to external and
independent oversight for the first time in
history. Previously, the profession was selfregulated.
Overview of PCAOB
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PCAOB Key Areas of Responsibility
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Registration
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Inspections
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Enforcement
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Standards
The SEC has oversight authority over the
PCAOB, including the approval of the
Board’s rules, standards, and budget
Standards-setting
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The Sarbanes-Oxley Act gave the Board the
authority to establish:
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The Act specifically directed the Board to
establish the following auditing standards:
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Auditing and related attestation standards
Quality control standards
Ethics standards
Independence standards
Audit Documentation
Engagement Quality Review
Internal Control over Financial Reporting
Reporting on Internal Control Over
Financial Reporting
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A significant factor in US audit
requirements
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A pervasive difference between audits
conducted under the standards of the
PCAOB and under audits conducted under
the standards of the IAASB
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Has improved audit quality and the
reliability of financial reporting
Excerpts from Statements on Benefits of
Internal Control Reporting
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[I]nvestors have greatly benefited from reporting about
the effectiveness of ICFR and that such reporting … and
the related requirement for an auditor’s attestation
report has … enhanced the reliability of financial
statements … (Deloitte & Touche)
We believe this heightened focus on the production of
reliable financial reporting, predicated on effective
internal control, is very positive … (PwC)
We strongly agree with the Board’s observations that
auditing and reporting on ICFR has produced significant
benefits and protections to investors … (Ernst & Young)
We believe that internal control pursuant to Section 404
has made … a significant contribution toward improving
financial reporting, corporate governance and audit
quality (KPMG)
Standards of the PCAOB
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Interim standards
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Adopted by the Board in April 2003; standards remain in
effect to the extent not superseded or amended by the Board
Auditing, attestation, quality control, ethics, and
independence standards and related rules
PCAOB issued standards, rules, and guidance
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Auditing standards No. 1 – 7
PCAOB rules related to standards
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Rule 3101 – Certain Terms Used in Auditing and Related
Professional Practice Standards
Rules 3501 to 3526 – ethics and independence
Staff questions and answers
Staff audit practice alerts No. 1 – 4
Staff guidance for auditors of smaller companies on AS No. 5
Standards-setting Process
Internal coordination with Divisions of
Inspections and Enforcement
 PCAOB Standing Advisory Group
 Work with other standards-setters and
organizations, e.g., IAASB, IESBA
 Development of a new auditing standard
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Use International Standard on Auditing as a starting
point
Explain areas of necessary departure (i.e., internal
control)
Publicly issue analysis of significant differences
between the Board’s standard(s) and IAASB and
ASB standard(s)
PCAOB
November 17, 2009
Martin F. Baumann
Chief Auditor, Office of the Chief Auditor