In April 2010, the PCAOB issued a disciplinary order instituting disciplinary proceedings, making findings, and imposing sanctions in the case of Robert T. Taylor, CPA (both the firm and the individual auditor). The order can be found in PCAOB Release No. 1052010006 at www.pcaobus.org. (Hint: Search in the enforcement section of the Web site, then go to settled disciplinary orders, then scroll down to see the disciplinary order against Taylor.) Review the PCAOB Web site, access this release, and answer the following questions.

a. What is the PCAOB and what authority does it have to issue disciplinary orders and impose sanctions?

b. What is the PCAOBs source of potential violations of law or PCAOB rules?

c. The order in the case of Robert T. Taylor recognizes that PCAOB standards require that an auditor exercise due professional care, exercise professional skepticism, and obtain sufficient evidence on which to base an opinion on the financial statements. Describe instances in which the respondents in the order did not adhere to these requirements, resulting in low audit quality.

d. What sanctions were imposed in this case? Do the sanctions seem appropriate?