The Sarbanes-Oxley Act directed the Board to establish auditing and related professional practice standards for registered public accounting firms to follow in the preparation and issuance of audit reports for issuers. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Sarbanes-Oxley Act and vested the PCAOB with the authority to establish auditing and related professional practice standards for audits of the financial statements and selected practices and procedures of broker-dealers. The Board's Office of the Chief Auditor is responsible for developing these standards.
The Board has sought to give a wide variety of stakeholders the opportunity to provide input on standards as they are developed. Those stakeholders include investors, auditors, preparers of financial statements, other standard-setters, regulators, and various interested parties.
The Board's Standing Advisory Group provides advice on the Board’s standard-setting agenda and related matters. Additionally, the Board may use public roundtables, focus groups, and task forces to discuss certain topics relevant to its standard-setting activities. The Board also takes into account observations from its inspections of registered public accounting firm audits and other oversight activities as an integral part of standard-setting.
The Board may, depending on the nature of the project, issue a concept release to solicit public comment prior to issuing a proposed standard. Typically, after the Board reviews the feedback received, it proceeds with development of a draft standard and related proposing release. After issuing the proposed standard and related release for public comment, the Board considers the comments and determines whether to adopt the proposed standard as final or re-propose the standard for additional public comment. Once the standard has been adopted, the Board then submits it to the Securities and Exchange Commission for approval.
The SEC solicits public comment on the Board’s standard and a decision is made whether to approve it. A PCAOB standard does not become effective unless and until it is approved by the SEC.