Be aware: New laws are here; Although regulations related to these laws are still in the proposal stage, the laws became effective Jan. 1, 2003.

• Position: News & Trends

Documentation

Audit documentation must be retained for seven or more years. And all firms, whether hey serve public or private companies, must have written retention and destruction policies for audit documentation.

The new law also establishes a rebut-table presumption. Beginning Jan. 1, 2003, you must supply and retain work papers that would allow any reviewer with relevant knowledge and experience (but having no previous experience with the engagement) to understand the audit.

If such papers are not in the engagement file and there is a dispute, the burden of proof shifts to the CPA to show .hat the appropriate work was performed. f the papers are not there, it is presumed hat the auditor did not do the work.

Auditor Cooling-Off Period

CPAs in a position of significant audit responsibility for an SEC client are prohibited from assuming a responsible position with the client for one year after they performed the client's audit. This law may be superceded by the Sarbanes-Oxley Act and prohibits anyone working on the audit from becoming the executive officer, controller, CFO, chief accounting officer or the equivalent with the client for one year.

Discipline

The definition of a "reportable event" has changed. Beginning Jan. 1, 2003, CPAs must report any of the following events to the CBA within 30 days. These events will be published for public review:

* Restatement of a financial statement by the audit client of a CPA;

* Civil settlement or arbitration award against a CPA relating to the practice of public accounting of $30,000 or more;

* Receipt of a notice to a CPA of the initiation of an SEC investigation;

* Any SEC notice to a licensee requesting a "Wells Submission";

* An investigation by the Public Company Accounting Oversight Board; and

* Any civil judgment alleging dishonesty; fraud; gross negligence; negligence; breach...