AICPA comments on numerous SEC proposals stemming from Sarbanes-Oxley.

• Position: Regulatory matters

The AICPA has expressed its firm commitment to work with the Securities and Exchange Commission in accomplishing the timely and effective implementation of the Sarbanes-Oxley Act. To that end, the AICPA has commented on numerous SEC proposals focused on internal control reporting, audit committees, codes of ethics, misleading auditors, off-balance-sheet activities, non-GAAP proforma financial disclosures and auditor independence--seven key areas of the law in which the CPA profession has long-held and strongly advocated positions to protect the public and add valuable information to the capital markets and investors.

Internal Control Reporting. The SEC proposed management and independent auditor reporting on the effectiveness of internal control over financial reporting, which the AICPA has long supported. The AICPA suggested the SEC look to the Committee of Sponsoring Organizations of the Treadway Commission for an example of a comprehensive internal control framework.

Audit Committees. The Act shifts significant responsibilities for the audit from management to the audit committee, and requires that at least one member of a company's audit committee be a "financial expert." The AICPA recommended the SEC go even further when it writes its final rule to require that all audit committee members have financial experience, preferably with a majority of them having significant financial experience.

Code of Ethics. The AICPA supported expanding the requirements in the Act from requiting only that the principal executive officers have a code of ethics to requiting that companies adopt and disclose a code of ethics for all corporate directors and employees, and that companies promptly disclose any non-de minimis waivers of the code. Moreover, the AICPA advocates that all corporate directors and employees each year be required to review the code of ethics and sign a statement indicating their compliance with it, and that exceptions be reported to the appropriate level of management or board for resolution.

Misleading Auditors. The AICPA strongly supported the SEC's proposal to prohibit any officer or director of issuers of financial statements that are being audited, or anyone else acting under their direction, from misleading an auditor. The AICPA urged the SEC to broaden its proposal to include anyone--whether internal or external to the company--from misleading an auditor.

MD&A Disclosure. The AICPA supported the SEC's proposal for disclosure of...