A year of renewal and reforms.

• Position: Special feature: the year in review

The past year was a dynamic one for the accounting profession, full of challenges and opportunities. Last summer, President Bush signed into law the Sarbanes-Oxley Act of 2002--a sweeping reform measure with a direct impact on the profession that, among other things, created the Public Company Accounting Oversight Board. The Institute pledged its full commitment to working with the Securitie and Exchange Commission and the PCAOB to implement the new law and uphold the public trust. In fact, Institute leaders were at the forefront of efforts to propose or enact reforms. In congressional testimony, AICPA representatives put forward a number of suggestions that ultimately were embodied in the new law. Then, last Sept., in the wake of Sarbanes-Oxley, AICPA President and CEO Barry Melancon called for a rejuvenated accounting culture and made a commitment to restoring confidence in the profession and the financial markets. Melancon envisioned six roles for the AICPA going forward: involvement in standard setting; acting as a liaison between market institutions and corporations; conducting research; providing education; enhancing the quality of business reporting; and promoting strong corporate governance and internal control systems. Furthermore, in his inaugural speech as incoming chair in Oct. 2002,William Ezzell spoke of restoring CPAs' belief in themselves and in the core values and shared purpose of the profession.

With initiatives to reinforce the profession's reputation continuing, The CPA Letter offers this review of the many ways in which the Institute has worked to benefit the profession during the past year. While we spotlight the Institute's response to accounting reform, fraud and corporate governance issues, as well as efforts on the regulatory and legislative fronts, we also discuss new professional tools and guidance available to members, initiatives undertaken to enhance the profession's image and some of the public service efforts of the last year.

Restoring Faith in Business Reporting and the Profession

* As part of its commitment to cooperating in the reform effort, the AICPA commented on numerous SEC proposals to implement Sarbanes-Oxley. Our letters reflected the profession's long-standing positions to bolster the public interest on issues such as management and auditor reports on internal controls, sanctions against those who would mislead auditors and a stronger role for independent audit committees. We also leveraged the expertise of our members in commenting on SEC proposals on accounting for off-balance-sheet activities, non-GAAP pro-forma financial disclosures, auditor independence and records retention in audits.

* To keep members informed of SEC and PCAOB actions and proposals, the Institute created Sarbanes-Oxley Act/PCAOB Implementation Central, an online resource that can be found at www.aicpa.org/Sarbanes/index.asp. It includes a link to the text of Sarbanes-Oxley, a summary of the Act, a timetable for SEC proposals, SEC rulemaking actions, AICPA comment letters in response to those proposals, the latest developments in implementing the Act and PCAOB news and activities. The Institute also set up a hotline (866/265-1977) to help members understand and comply with the Act.

* At the state level, legislators, regulators and other elected or appointed officials have sought to duplicate and/or extend provisions of the Sarbanes-Oxley Act to private companies and their CPAs. The newly created Special Committee on State Regulation developed "A Reasoned Approach to Reform," which serves as a blueprint for state CPA societies in reviewing and responding to proposals that states might apply to private companies and their CPAs. Members can read the white papers that make up "A Reasoned Approach to Reform" and...