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Sarbanes-Oxley News & Developments
New Era Will Begin on April 25, 2003 For Corporate AuditorsIn the early 20th century, George May wrote the rules - including self-rgulation - that have long guided the accounting profession. That is changing on April 25, 2003.
> > On April 25, a new era will begin for corporate auditors. That is the day the Public Company Accounting Oversight Board (PCAOB), the watchdog group created by last years Sarbanes-Oxley Act, will adopt an initial series of suditing guidelines. The absolute power held by this five-person regulatory body - only two of whom can be CPAs, neither practicing - means that for the first time since 1933, when federal law gave auditors the franchise to independently audit company financial statements, the rules for the profession will be set by outsiders instead of by auditors themselves.
The big accounting firms and the American Institute of Certified Public Accountants (AICPA) are especially concerned that, sooner or later, the PCAOB will require auditors aggressively seek out management fraud - such as that uncovered recently at HealthSouth (HLSH), and last year at Enron (ENRNQ), WorldCom (WCOEQ), and Tyco (TYCO) - instead of just certify that a companys financial statements adhere to Generally Accepted Accounting Principles (GAAP). Broader, fruad-fighting responsibility is something the auditing profession has said for decades that it does not want. But that was before the 2002 demise of accountants Arthur Andersen, which presided over auditing failures at Sunbeam, the Baptist Foundation of Arizona, Global Crossing (GBLXQ), and of course Enron and WorldCom.
Source: BusinessWeek /online article by Mike Brewster dated April 22,2003
Published:2003-04-23
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