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AICPA:
Suggested Talking Points for Media Inquiries Resulting From
Washington Post Series
Prepared 12/7/01
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"The spotlight, and rightly so, is on the quality of the
audit - can it be trusted. It is up to us, (the profession),
to help investors regain any lost confidence they may
have in the process." - Jim Castellano, Chair of the AICPA
Board
- The
AICPA and the CPA profession are committed to constantly
evaluate and improve our financial reporting and auditing
systems.
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We recognize that a strong, diligent, and effective profession
is a critically important component of the financial reporting
system and fundamental to maintaining investor confidence
in our capital markets. We take our responsibility seriously.
Specific to the current challenges and the reporting
cycle
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The Big Five firms are working with the AICPA to develop
specific recommendations to the SEC for improved disclosure
guidance on related party transactions, special purpose
entities (SPEs), and issues related to market risks, including
those relating to energy contracts. We will urge that
this additional information be available to investors
in 2001 annual reports.
- In
light of the current challenging business environment,
the firms and the AICPA are preparing an assessment of
risk factors that may be important for financial statement
prepares, audit committees and auditors to consider during
the current reporting cycle.
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The AICPA is developing an auditor "tool kit" for related
party transactions. This tool kit will consolidate all
existing reporting and audit guidance covering related
party transactions and make suggestions for auditors to
consider during the current audit season.
Ongoing
and longer term efforts
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The profession will continue to build on the recommendations
made last year by the Independent Panel on Audit Effectiveness.
Many of the recommendations have been put into place.
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On a broader scale, we will work with the SEC as it begins
the process of modernizing our financial reporting system,
which is long overdue. The process of accounting standard-setting
is too cumbersome and slow in today's economy. Working
with others, we will find ways to streamline and modernize
the system.
- The
Auditing Standards Board will be issuing a series of related
exposure drafts over the next six months, which will include
- a
new auditor standard for detecting fraud
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guidance for company managements and audit committees
on the new measures for deterring fraud, such as internal
control procedures.
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guidance for auditors on risk assessment and related
procedures regarding material misstatements whether
caused by fraud or error,
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revised auditor standards on review of quarterly financial
statements.
Closing
Comment
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We recognize that the profession must maintain the confidence
of investors. Self-regulation is right for investors,
the profession, and the financial markets, and we know
that changes are needed. We will work to make the right
improvements in a timely way.
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