OFFICE OF INTERNAL OVERSIGHT AND PERFORMANCE ASSURANCE
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
Adopted by the Board – April 13, 2004
Mission and Scope of Work
The Governing Board has charged the Office of Internal Oversight and Performance Assurance ("Office") to provide internal examination of the programs and operations of the PCAOB, to help ensure the internal efficiency, integrity, and effectiveness of those programs and operations. The assurance provided by the Office is intended to promote the confidence of the public, the Securities and Exchange Commission, and the Congress, in the integrity of PCAOB operations.
The Office will conduct annual and special reviews, audits, and inquiries, to help ensure that the organization –
- Identifies and appropriately addresses risks to the integrity and effectiveness of its programs and operations.
- Identifies and implements opportunities to improve the effectiveness or efficiency of programs and operations.
- Reports material and relevant information, including performance and financial information, in a fair, complete, reliable, and timely manner.
- Complies with applicable laws, regulations, and policies.
- Appropriately safeguards and uses resources in an efficient manner.
- Conducts its programs and operations so as to protect and promote the public interest in the integrity of audits.
The Office shall be accountable to the Governing Board to –
- Provide ongoing, real-time, quality assurance with regard to the design and operating effectiveness of PCAOB programs (e.g., registration, inspections, enforcement, standards-setting, and financial and risk analysis) and operations (e.g., administration, IT, human resources, and finance).
- Plan, recommend to the Governing Board, and conduct a program of annual performance reviews of programs and operations.
- Upon the Governing Board's initiative, or upon the recommendation of the Office, the SEC, or other appropriate governmental authority, and at the direction of the Governing Board, plan and conduct special reviews of, and inquiries relating to, PCAOB programs and operations.
- Serve as liaison to any public accounting firm retained by the Governing Board to perform an annual external audit of the PCAOB's financial activities and/or internal control.
- Receive and review allegations of wrongdoing lodged against PCAOB employees.1/
Communication and Reporting
The Director of the Office shall –
- Report to the Governing Board, and upon the direction of the Governing Board to the SEC and other governmental authorities, on the status and results of its performance and quality assurance reviews and inquiries.
- Report to the Governing Board, and at the direction of the Governing Board to managers of PCAOB programs and operations, significant issues relating to the efficiency, integrity, and effectiveness of those programs and operations, including potential improvements to those programs and operations.
- Make a continuing effort to keep the Office of General Counsel, including specifically the designated Ethics Officer, informed about the Office's activities, including the results of inquiries and allegations of ethical misconduct where appropriate.
- Provide input to the Board's annual status report incorporating the results of the annual external financial audit, as well as appropriate public summaries of the results of the annual performance review, key special reviews, and other oversight activities.
- In addition, in order to ensure the independence of the Office, and consistent with the Office's charter, the Office should report immediately to the Governing Board whenever the Office becomes aware of particularly serious or flagrant problems, abuses, or deficiencies relating to the administration of programs and operations of the PCAOB. The Governing Board should transmit any such report to the SEC within seven calendar days, together with a report by the Governing Board containing any comments it deems appropriate.
The Director and staff of the Office should be free both in fact and appearance from personal, external, and organizational impairments to independence. The Director and staff of the Office have a responsibility to maintain independence, so that opinions, conclusions, judgments, and recommendations are impartial and are viewed as impartial by knowledgeable third parties, including the SEC and other governmental authorities. The Director and staff of the Office should avoid situations that could lead reasonable third parties with knowledge of the relevant facts and circumstances to conclude that the Office is not able to maintain independence in conducting its work.
To promote the objectivity of the Office, the Director of the Office reports directly to the Governing Board. The Governing Board has exclusive authority to hire, fire, and establish the compensation and other terms of employment of the Director.
The Office may not perform any operational or management function for a PCAOB program or operation; record any accounting transaction, other than those necessary to provide for the allocation of the resources of the Office; or supervise or direct any PCAOB employee outside the Office, except to the extent such employees are assisting in a review or investigation for the Office.
This organizational structure is intended to ensure the integrity and objectivity of the activities of the Office of Internal Oversight and Performance Assurance.
The Office shall maintain a professional staff with sufficient knowledge, skills, experience, and professional certifications to meet the requirements of this Charter. In addition, the Governing Board shall allocate in the annual budget appropriate resources for the Office, including training, information services, and external consulting services, to meet the requirements of this Charter.
The Governing Board intends for the Director and staff of the Office to have unrestricted access to the records, offices, and employees of the Board. In addition, the Office may obtain the assistance of PCAOB staff and, as approved by the Board in the context of a review plan or otherwise, outside consultants.
The Act and the PCAOB Ethics Code, as required by the Act, place strict requirements on the Board and its staff to safeguard the confidentiality of Board documents and other information. While the Director and employees in the Office are subject to the Act and the Ethics Code, the Governing Board authorizes the Office to make workpapers associated with Office reviews available to the SEC and its representatives in a designated PCAOB space.