New credit union audit legislation.

New Credit Union Audit Legislation

C ongressman Bill McCollum (R-Fla.) introduced a bill that would require licensed accountants to perform external audits on federally insured credit unions. In a statement to the press, he said audits lose their effectiveness when not performed according to professional standards by persons who have demonstrated their competencies and independence in auditing.

The legislation is in direct response to a final rule adopted by the National Credit Union Administration (NCUA), which requires member credit unions to have external audits of their financial statements but does not require that the audits be based on generally accepted accounting principles or be audited by an independent licensed accountant. Also, the Federal Credit Union Act (FCUA) does not require credit unions to prepare written statements regarding their compliance with laws and regulations.

The Credit Union Audit Improvement Act of 1997 (HR 2552) would amend the FCUA to require each federally insured credit union to

• Prepare financial statements in accordance with GAAP.
• Have an independent audit of the financial statements performed by an independent licensed accountant in accordance with generally accepted auditing standards.
• Prepare an annual written assertion about the effectiveness of the credit unions internal controls.
• Obtain an attestation report on the credit union managements report on internal controls.
• Prepare an annual written assertion concerning its compliance with safety and soundness regulations.

The bill, which exempts credit unions with assets of less than $10 million, has been endorsed by the American Institute of CPAs and the National Association of State Boards of Accountancy. The bill would apply to fiscal years ending on and after December 15, 1997.

Schuetze Appointed to SEC Enforcement

W alter P. Schuetze has come out of retirement to accept an appointment as the chief accountant of the Securities and Exchange Commission Division of Enforcement. Schuetze retired from the agency in 1995 after more than three years of service as the SEC chief accountant—the agencys top accounting job. He replaces George Diacont, who resigned to work for NASDAQ.

Schuetze made news in 1993 when he publicly questioned the independence of auditors, saying it was very troubling that CPAs may have become cheerleaders for their clients on a number of accounting issues. His remarks prompted the appointment of a special advisory committee by the Public Oversight Board (POB) of the American Institute of CPAs SEC practice section that recommended ways to bolster auditor independence.

In his new post, Schuetze will be responsible for policing accounting irregularities at publicly traded companies and will investigate conflicts of interest within the auditing profession. Mr. Schuetze has tremendous depth and experience in all of the accounting issues that confront the SECs enforcement program, SEC Chairman Arthur C. Levitt, Jr., said in a statement. It is a great pleasure to welcome him back.

Before his appointment as SEC chief accountant, Schuetze was a partner of KPMG Peat Marwick and served as a charter member of the Financial Accounting Standards Board from 1973 to 1976. He is a former chairman of the AICPA accounting standards executive committee.

Levitt Nominated for Another Term

P resident Clinton nominated Securities and Exchange Commission Chairman Arthur Levitt, Jr., to another five-year term. If Levitt completes the term, he will be the longest-serving chairman in the 63-year history of the SEC. The reappointment is subject to Senate approval.

New Accounting Fellow Chosen; SEC Seeks More Applicants

D. J. Gannon, a manager at Deloitte & Touche in Wilton, Connecticut, was selected to serve as a professional accounting fellow in the Securities and Exchange Commission Office of the Chief Accountant. His two-year term began in October.

Gannons primary focus will be on international accounting, reporting and auditing issues. He will review and evaluate proposed international accounting and auditing standards and will consult registrants on the application of non-U.S. generally accepted accounting principles in documents filed with the SEC.

Three positions to fill
The SEC is accepting applications for three other two-year accounting fellow positions. The SEC seeks an individual with experience in accounting for financial instruments and financial institutions other than banks and it also wants applicants with experience in accounting for business combinations, stock compensation and consolidations. Applicants must have a minimum of eight years experience in public accounting, with at least two years as a manager.

Fellows work directly with the chief accountant and are involved in the study and development of rule proposals, liaison with professional accounting standard-setting bodies and consultation with registrants on accounting and reporting matters. The three fellows will be selected in early 1998.

Applications must be submitted by December 31. More information and application procedures are available by contacting Robert Uhl, Office of the Chief Accountant, at 202-942-4400.