Publicly held companies must navigate a challenging regulatory landscape. One of the most critical aspects of compliance is ensuring the company is prepared for the rigorous reporting and internal control standards required by the Securities and Exchange Commission (SEC). While external audits are typically conducted by a PCAOB-registered firm, many companies also need to comply with Section 404 of the Sarbanes-Oxley Act (SOX 404), which requires management to assess and document the effectiveness of internal controls over financial reporting.
Understanding the five key roles and entities involved in the public company reporting process can help businesses stay compliant and secure their financial viability.
1. Public Company Accounting Oversight Board (PCAOB)
The PCAOB is a congressionally established nonprofit organization responsible for overseeing audits of public companies within the United States to protect investors’ interests. PCAOB members inspect and assess PCAOB auditors, Form 10-Ks, Forms 10-Q, Form 8-Ks, S-1s, and other financial disclosure documents.
2. Securities & Exchange Commission (SEC)
The SEC has oversight authority over the PCAOB, including approval of rules, standards, and budget proposals. The SEC also reviews all PCAOB reports before they are released publicly, ensuring accuracy and compliance with federal securities laws. Additionally, they investigate possible violations of federal securities laws related to public companies’ financial statements and disclosure documents. They also review Form 10-K filings and can request additional documentation as needed. SEC regulations are the foundation of financial transparency in public markets, including compliance with SOX 404(a) and, for larger filers, SOX 404(b).
3. SEC Counsel
The role of the SEC counsel in the public company audit is to help ensure the publicly held company adheres to SEC rules and regulations for filings and disclosures. They will also help prepare Form 10-K for submission to the SEC.
4. EDGAR Agent
An EDGAR agent helps companies file electronically through EDGAR Online Filing System. As part of their role, they can help process and convert the original financial documents from a company into EDGAR-compatible formats for the SEC. An EDGAR agency can also troubleshoot any problems that may arise during or after submitting those documents.
5. Publicly Registered Accounting Firm (External Auditor)
A registered public accounting firm is hired to perform the SEC audit for a client. For companies subject to SOX 404(b), this includes attesting to the effectiveness of internal controls. The CPA should be registered with the PCAOB and have experience performing audits on publicly traded companies and knowledge about GAAP standards and regulations.
Supporting Your Public Company Audit with SOX 404 Compliance Efforts
A successful PCAOB audit requires collaboration between several key players—including legal counsel, independent CPAs, EDGAR Agents, SEC representatives, and members of the board itself—all working together toward one common goal: protecting investors’ interests through accurate financial reporting from publicly held businesses.
At Assurance Dimensions, we specialize in SOX 404 compliance services, helping companies design, document, and evaluate their internal controls over financial reporting. Whether you’re preparing for an IPO or maintaining ongoing compliance as a public company, our team can help you build a strong compliance foundation, identify gaps, and support your collaboration with your external audit firm.
Contact us today to learn how we can support your SOX 404 readiness and ensure you’re on track with evolving regulatory requirements. Learn more about our audit and assurance services.
