The Sarbanes-Oxley Watchdog
The Public Company Accounting Oversight Board (PCAOB) is a private-sector watchdog charged with overseeing "the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair and independent audit reports."

Created by the Sarbanes-Oxley Act, the PCAOB establishes "auditing and related attestation, quality control, ethics, and independence standards and rules" used by public accounting firms in preparing audit reports.

In addition to setting standards, the PCAOB has "broad investigative and disciplinary authority over registered public accounting firms..." and their employees.

The PCAOB recently adopted a rule that would sharply limit the ability of independent auditors to provide tax shelter advice to their clients. Although some stakeholders had urged even more stringent restrictions, the rule would not prevent auditors from performing other tax-related work, such as tax preparation and planning, for their clients.

The Chairman of the PCAOB explained that new rule was "right for the investing public, because it will keep the auditors of public companies out of the aggressive tax work that has so damaged the public's confidence." The PCAOB rule will not take effect unless approved by the Securities and Exchange Commission (SEC).

Winston considers PCAOB to be more than just an important watchdog. An independent private-sector organization that takes the lead in developing and enforcing regulations, subject to federal oversight, provides an interesting model that could prove effective and efficient for other applications.