Title: Restoring Public Confidence; the AICPA Is Supporting and Implementing a Range of Reforms
Abstract: This is a difficult time for all of us involved with the financial reporting process. The repercussions of the Enron collapse are being felt on many levels, none more so than within the accounting profession. The AICPA shares the distress of all Americans concerning the tragic breakdowns that contributed to the fall of Enron. We take seriously our public responsibility and are committed to doing everything possible to restore confidence in our profession. These are not just idle words. Our profession has a more than 100-year history based on public trust and integrity. Each year more than 15,000 audits of publicly traded companies are completed successfully without restatement or allegations of impropriety. Thousands more audits of private companies and business enterprises--from hospitals, charities and youth groups to the newest businesses--are performed successfully by our members. Collectively these audits serve as the bedrock of the U.S. economy. Unprecedented disasters, however, sometimes call for unprecedented actions. We want to make it unmistakably clear that not only does our profession have zero tolerance for any CPA who does not adhere to the rules but, in the wake of the Enron collapse, is prepared for unprecedented change. Our history is marked by a willingness and commitment to respond to key market and economic events and to make the changes required to maintain public confidence in both our profession and the securities markets. Twenty-five years ago the profession created the SEC practice section (SECPS) to improve accounting and auditing practices before the SEC. We also instituted peer review as a means of ensuring the uniform and consistent application of the profession's high standards to all clients. recently in 2000 the Public Oversight Board's Panel on Audit Effectiveness--more commonly referred to as the O'Malley Panel--recognized that the profession and the quality of its audits were fundamentally sound although certain improvements clearly were needed. The panel's recommendations are currently being implemented. In 1996 the General Accounting Office issued a comprehensive, two-volume report titled The Accounting Profession--Major Issues: Progress and Concerns. It detailed the actions and progress the accounting profession had made during the previous two decades to improve accounting and auditing standards and the performance of independent audits. The report expressed support for the quality control programs we had implemented to ensure that professional standards were being met and commended the profession for the steps it had taken to strengthen auditor independence, such as the AICPA's revision of its code of ethics. Most firms now have effective quality control programs to ensure adherence with professional standards, it concluded. That said, we have never been content to rest on our laurels but have always made continuous, incremental improvements. The profession's self-regulatory framework is now about 25 years old. Although it has been continually enhanced and improved by the profession since its inception, the Enron collapse has made it clear to everyone that a substantial overhaul and modernization are needed. The public's confidence has clearly been shaken. We know that in order to restore that confidence in the auditing profession, our self-regulatory process must be further strengthened for the future. We are prepared to do just that. The AICPA is actively engaged in supporting and implementing reforms on a number of fronts in an effort to restore public confidence in the capital markets. Some of our current efforts represent new initiatives. Many more are an acceleration of efforts that have been under way since well before the Enron collapse. SCOPE OF SERVICE RESTRICTIONS In some instances the AICPA has embraced reform proposals that it previously had opposed, such as some scope of service restrictions for auditors of public companies. …
Publication Year: 2002
Publication Date: 2002-04-01
Language: en
Type: article
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Cited By Count: 5
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