Briefly discuss the key events that led up to the Sarbanes-Oxley Act of 2002 and the creation of PCAOB
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Accounting
- During the late 1990s and early 2000s, accounting firms aggressively sought opportunities to expand their business in non-audit services such as consulting.
- This expansion from their core audit practice, combined with allegations of auditors refusing to challenge management's actions, resulted in conflict between regulators and the accounting profession.
- Subsequent financial fiascos such as those at Enron, WorldCom, Tyco, and many others caused investors to doubt the fundamental integrity of the financial reporting system.
- Under pressure to restore the public's confidence, Congress passed the Sarbanes- Oxley Act and created the PCAOB in 2002.
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