<P> The Board's Office of the Chief Auditor advises the Board on the establishment of auditing and related professional practice standards . </P> <P> Each of these powers is subject to approval and oversight by the SEC . Individuals and audit firms subject to PCAOB oversight may appeal PCAOB decisions (including any disciplinary actions) to the SEC and the SEC has the power to modify or overturn PCAOB rules . </P> <P> The PCAOB periodically issues Inspection Reports of registered public accounting firms . While a large part of these reports is made public (called "Part I"), portions of the inspection reports that deal with criticisms of, or potential defects in, the audit firm's quality control systems are not made public if the firm addresses those matters to the Board's satisfaction within 12 months after the report date . Those portions are made public (called "Part II"), however, if (1) the Board determines that a firm's efforts to address the criticisms or potential defects were not satisfactory, or (2) the firm makes no submission evidencing any such efforts . </P> <P> The PCAOB was created in response to an ever increasing number of accounting "restatements" (corrections of past financial statements) by public companies during the 1990s, and a series of high - profile accounting scandals and record - setting bankruptcies by large public companies, notably those in 2002 involving WorldCom and Enron, and the audit firm for both companies, Arthur Andersen . Prior to the creation of the PCAOB, the audit profession was self - regulated through its trade group, the American Institute of Certified Public Accountants (AICPA). The AICPA's Public Oversight Board was formally dissolved on March 31, 2002, though its members had resigned en masse in January 2002 to protest then - SEC Chairman Harvey Pitt's proposal for a new private auditor oversight body to regulate the profession (a proposal which would evolve into the PCAOB). </P>

The public company accounting oversight board has the power to do what