House passes bill to change regulation of accounting profession.

• Position: Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 - Brief Article

The House of Representatives passed H.R. 3763, the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002, by a vote of 334-90 with broad bipartisan support. The bill would impose unprecedented and rigorous reforms in the discipline and oversight of the accounting profession.

Self-regulation has been part of our profession for nearly 110 years, but the AICPA appreciates that the times call for special measures to maintain investor confidence. Therefore, the Institute will work cooperatively to move to the new independent regulatory body mandated by the bill.

The bill affects auditors of public companies' financial statements and also would impose a variety of requirements on public companies to protect the public and enhance transparency. The Public Regulatory Organization (PRO) that H.R. 3763 creates would, under the oversight of the Securities and Exchange Commission, assume the disciplinary and peer review functions for auditors of public companies' financial statements. The bill includes provisions that charge the SEC with modifying auditor independence regulations to prohibit auditors from providing internal audit outsourcing services or financial information systems design or implementation services to their public company audit clients. The bill also would mandate retention of certain audit records for a minimum of seven years. In addition, certain provisions would prevent corporate officers from exerting improper influence on auditors and force corporations to quickly disclose their financial condition and off-balance-sheet transactions upon SEC request.

Under the bill, the AICPA retains the responsibility for setting auditing standards and for...