An Analysis Of The Regulatory Environment – Continuous Auditing LLC And PCAOB

The regulatory business in the field of accounting and finance refers to a regulatory framework whose sole goal is to bolster the efforts of regulation (of firms) and risk management in the banking sector (Sáez, World Bank., & Molinuevo, 2014, p.11). During the early 2000s, the regulatory environment underwent massive overhauls after corporate malfeasance and accounting scandals were brought to the limelight. During this period, whistleblowers predicted that the professional malpractices that had been committed by firms in Worldcom and Tyco Scandal of 2002 would steadily lead to a state of global recession.

In the wake of these scandals, regulatory agencies were created to ensure that regulations such as the Sarbanes-Oxley Act of 2002 is implemented and adhered to by auditing firms in a bid to create an environment of transparency and accountability (Blarcom, 2014 p326). One such board is the Public Company Accounting Oversight Board (PCAOB) which is a nonprofit corporation from the private sector whose main aim is to supervise accounting professionals who are tasked with the responsibility of providing unfettered audit reports in relation to publicly traded companies.

Last summer, I was fortunate enough to land an internship opportunity at the 247 Continuous Auditing LLC Headquarters in Maryland, USA where I had a chance to apply my theoretical accounting knowledge in a practical environment. During my stint at the firm, I was mainly tasked with balance sheet reconciliation, working on the yearly forecasting efforts and most importantly assisting with audits which led me to learn that the firm was in essence registered with Public Company Accounting Oversight Board (PCAOB) in an effort to ensure that the highest standards of professional ethics are followed. The board enforced its policies on the firm to also ensure that auditing is always carried out, independence in audit, quality control and all the standards that relate to public companies are followed to the letter.


                   Regulations that would also apply to 247 Continuous Auditing LLC Firm

The regulations that govern the conduct of 247 Continuous Auditing LLC are meant to create a regulated business environment devoid of any professional malpractice.

An additional regulation that the firm has to adhere too is compliance with the Sarbanes-Oxley Act of 2002 The firm would ostensibly be required to practice enhanced financial disclosures, senior executives taking corporate responsibility for the accuracy of the financial reports that had been submitted and analyzing any tale-tale signs of conflict of interest (Blarcom, 2014, p.326 ). The firm would also be obligated to establish auditing, independence in the auditing process and quality control.

              Benefits of compliance with regulations

              The consumers would benefit from the regulation of firms by standards agencies when the shares price rises.             The standard agencies such as Public Company Accounting Oversight Board (PCAOB) usually address any complains made about a firm very early(Moosa & Ramiah, 2014, p183) This allows any material weaknesses that exist in the internal control to be dealt with early leading to the firm being viewed as reliable and share prices increasing.

The low borrowing costs caused by the improvement in internal controls have benefited many industries. These low borrowing costs allow companies to apply for loans of large amounts of money. This money is used in their logistical planning, operational costs and also as starting capital for any new venture that they would want to delve into. The borrowing cost among firms which have registered with standards agencies is believed to be between 50 and 150 basis points (Moosa & Ramiah, 2014, p183).

Corporate transparency is promoted by the implementation of policies from standard agencies as the top executives have to take corporate responsibility whenever there is an inaccuracy in the financial report that they presided over. According to an accounting author by the name Sharon Ward, “transparency is a by-product of a regulated business environment as the top executives in the firms are aware of the fact that they will have to take responsibility whenever there anomalies are discovered in their financial reports”. (Ward, 2016, 386)


          Cooperation between 247 Continuous Auditing LLC firm and the Public Company Accounting Oversight Board (PCAOB)

While at 247 Continuous Auditing LLC firm it was noteworthy that the firm was registered to a standards agency in a bid to ensure that they comply with all regulations and building the clients trust. First, 247 Continuous Auditing LLC was registered to the Public Company Accounting Oversight Board (PCAOB) and complied with all the business environment regulations and accepting to adhere to the Sarbanes-Oxley Act of 2002 (Blarcom, 2014 p326).  . The fact that the firm is registered creates a cordial but professional relationship between the two agencies.

The firm also ensured that it was always on time when conducting of audit plans, quality control and the independence of audit was a paramount requirement. This, as ……puts it, ensures that the firm and the standards agency coordinate in the regulation process and any professional misconduct is pointed out early to ensure that necessary steps are taken to deal with it. This would ensure the firm is viewed as reliable by their clients.

              Role of Ethics in regulation environment

      The personal commitment that a person has to adherence to a set of values and principles are important in the regulatory environment. It is the ethics that are instilled in an individual that will be responsible for reminding the person to stick to upright values and avoid professional misconduct (Tinker, Merino, & Neimark, 2010, p50). The ethics that a person has may have been acquired from education or even personal experience but nevertheless guide the actions of an officer.


                  How the regulatory environment directly affected my conduct at 247 Continuous Auditing LLC

        My conduct at this firm was directly affected by the regulatory environment that I was put as I had to adapt to the new environment by following all the regulations that are provided. The fear of making a mistake that will cost the whole company and senior supervisors always lingered on my head thus regulations might also have a negative side to it as employees do not feel comfortable at work and are always apprehensive with the fear of making a mistake that may cost them their jobs.

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