Certified Government Financial Manager (CGFM) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

The Public Company Accounting Oversight Board (PCAOB) was established by the Sarbanes-Oxley Act of 2002 specifically to oversee the audits of public companies. This organization was created in response to major corporate scandals and the resulting necessity for enhanced oversight to protect investors and the public interest.

The PCAOB's primary responsibilities include setting auditing standards, inspecting the quality of audits performed by registered public accounting firms, and enforcing compliance with relevant laws and regulations concerning public company audits. This oversight role is crucial for ensuring the integrity of financial reporting and building trust in the financial markets.

In contrast, the other organizations mentioned do not serve this specific purpose. The Government Accountability Office (GAO) focuses on governmental auditing and accountability, the American Institute of Certified Public Accountants (AICPA) is a professional organization that sets standards for private sector audit practices but does not oversee audits of public companies, and the Institute of Internal Auditors (IIA) deals with internal audits within organizations. Understanding the unique roles and responsibilities of these organizations helps clarify why the PCAOB is foundational in the realm of public company audits as mandated by the Sarbanes-Oxley Act.