Chair's corner.

• Author: Castellano, James G.

The Sarbanes-Oxley Act of 2002 is now law, and I am pleased that a number of the reforms advocated by the AICPA are included as substantial elements of this new, far-reaching legislation. The law creates the Public Company Accounting Oversight Board responsible for quality monitoring, investigations and discipline of public company auditors; mandates changes in corporate governance, including making the audit committee responsible for appointment of the independent auditor; and makes it unlawful for any officer or director of a public company to fraudulently mislead an auditor--all reforms called for by the AICPA in our congressional testimony. The new law also includes other provisions that we questioned, particularly concerning the Board's authority for standard setting, but it is now the law and we will do what is required to implement it.

This law is possibly the most sweeping reform ever to affect the accounting profession. Of course, while there are some threats and strategic questions arising from this legislation, I also see many opportunities. I see the potential to significantly raise the value of the audit and the prestige of the audit professional. The audit committee, in fulfilling its responsibility to shareholders, will likely focus primarily on the quality of the audit procedures to be performed, engaging the audit team in discussion about the risks of the business, the quality of accounting principles chosen by management, and the sufficiency of the budget to ensure the highest quality audit. My hope is that we will never again hear an audit described as a "commodity."

Auditors themselves have a tremendous opportunity to increase the value of our foundation service. I often speak of the "incredible privilege" that we have as auditors; that is, access to the most intimate financial and operational information about the entities we audit; access that no one else outside the entity normally has and that, in fact, very few people inside the entity have. As auditors, we should seize this opportunity to deliver more value to the stakeholders of the audit, and that includes management, by sharing the insight we gain while conducting an audit in a way that produces more than simply the report on the financial statements and report on internal controls.

I see auditors sharing the results of their risk analysis, benchmarking and analytical review procedures, industry...