Back to basics . 843

  • Hi,
    Let’s go back to the basic understanding of who rules what.
    I am trying to capture the scope of responsibilities of each of the following in order to understand the full picture - if possible:
    SOX: Act passed by congress, mandatory to each public cies (under Sec act 1934)
    SEC: adopted the Act through its Final rules release… is that right? but why and what for. The objective of having the SOX with mandatory nature exist already as passed as law?.
    PCAOB: interpreted the SOX act, issued the standard 1 and 2 to support public firms in their mission of assessment (and to issuers if internal audit team is smart enough, hence anticipating the controls of external auditors)
    Should anything be corrected, completed or deleted from these statements?
    thanks a lot to all volunteers.

  • Angie
    The Congress has issued tha law, the SEC has implemented it. Not every law that the Congress issues is applicable to public companies. Those that are,need to be implemented by the SEC. The SEC is an executive authority (see
    The PCAOB is established by SOA by Section 101. It is under direct supervision of the SEC and all rules/guidelines it issues need to be approved by the SEC first. But, the rules the PCAOB issues affect mainly the external auditors like e.g. the criteria for the non-audit services. But all these facts are in Title I of SOA.
    Hope this helps.

  • indeed it helps…
    it is to reorganize the ideas.
    when reading the SOX, I had the understanding that all these successive sections come to amend the securities act of 1934.

  • Angie
    Many of SOA sections indeed amend the Exchange Act of 1934, but not only. And it is not the Exchange Act affected only - e.g. the REIS or the Investment Company Act of 1940 are affected too.
    SOA has also sections that are brand new, not just amendments to existing laws.
    Here is a very good link that outlines the relationship between SOA and the SEC Acts:

  • Greeat I see it more clear now
    Some more precisions does not hurt anyone.
    From Europe, andwithout US coaching, it is hard to understand all these ‘politics’.
    REEEAAALLY Thanks.

  • No problem.
    I know how it is, since I am in Europe too and therefore used to my national legislation only.
    But since I have been writing my thesis on corporate governance in the USA and SOA in particular, I have been doing a lot of reading and research work lately. So now, after almost 2 months of reading and googling many things are clearer:)

  • HI Minnie,
    I am writing a paper too for the end of a Master.
    Would you like to share your approach and findings? I would like it.
    you’re welcome.

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