Audit firms need to be viewed as prioritizing high-quality audits and staff and partner integrity, top officials at the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) told attendees at conference last week, Accounting Today reported.

SEC Chief Accountant Paul Munter and FASB Chairman Richard Jones both spoke at the 42nd Annual SEC and Financial Reporting Conference, presented by the University of Southern California Leventhal School of Accounting and by Financial Executives International.

"I think we have seen, unfortunately, situations where accountants, including high-profile audit partners, have remained in positions of firm leadership even following enforcement actions taken by the commission that resulted in discipline against that partner, with seemingly no professional repercussions while waiting out the prescribed timeout period, effectively signaling to others in the firm that the findings of violation in the enforcement procedure are … simply a part of doing business," Munter said. "This approach, of course, results in an erosion of the special culture of the firm, introducing a host of problems, including the potential to undermine the public trust in the accounting profession or to normalize unethical or unprofessional conduct. Given the accounting profession's role of enhancing the public trust in corporate financial reporting for the success of our capital markets, accounting is called to be a profession that holds its members to the highest standards of ethics and integrity."

Jones discussed some of FASB's recent projects, including one on accounting for environmental credit programs, which comes close to environmental, social and governance (ESG) reporting, in conversation with Mark Kronforst, a partner at Ernst & Young and former chief accountant at the SEC's Division of Corporation Finance.

"We are specifically focused on financial accounting, but there were intersections with certain things we were seeing develop in the market, one of which related to ESG-linked financial instruments, which is part of our project on derivatives scope right now," he said. "We're hoping to get an exposure draft out before the end of the year. And the other was the emergence of the environmental credits."

That project is on FASB's technical agenda, and the FASB plans to issue an exposure draft.Other FASB projects include one on accounting for and disclosure of software costs; one on intangible assets, which is on the research agenda; and one involving the statement of cash flows, which Jones called an "oldie but a goodie."