Senator Lauds Efforts to Uncover Fraud
S enator Ron Wyden (D-Ore.) told members of the Senate that he was pleased with the recent work of the accounting profession and the Securities and Exchange Commission in clarifying the role of auditors in detecting fraud.
Wyden was the principal author of section 10A of the Private Securities Litigation Reform Act of 1995, which outlines the auditor's responsibilities in detecting and reporting fraud. Wyden said he had observed how the accounting profession and the SEC had responded to the new requirements under the 1995 act. "I am pleased that both the industry and the SEC have taken positive steps to assure that both the letter and the spirit of the law are fully adhered to," said Wyden.
Wyden said the American Institute of CPAs Statement on Auditing
Standard no. 82, Consideration of Fraud in a Financial Statement
Audit , in conjunction with SAS no. 54, Illegal Acts By
Clients , not only was consistent with section 10A but also
put the necessary procedures in place to help detect fraud early. In a
letter to the senator, SEC Chairman Arthur Levitt, Jr., also said that
both SASs improved auditors' ability to detect management fraud and
were consistent with the provision of section 10A.
Greenspan Opposes Derivatives Legislation
F ederal Reserve Chairman Alan Greenspan said he opposed pending legislation that would increase federal derivatives regulation under the Commodity Exchange Act (CEA). The Commodity Exchange Act Amendments of 1997, introduced in February by Senator Richard G. Lugar (R-Ind.), would clarify the Commodity Futures Trading Commission's oversight of privately negotiated derivatives contracts.
Greenspan told members of the financial markets conference in
Coral Gables, Florida, that the application of the CEA to privately
negotiated derivative contracts such as swaps, forwards and options
on interest and exchange rates was "wholly unnecessary."
"The marketing of off-exchange derivatives to retail customers
by banks and broker-dealers is more appropriately regulated by the
banking regulatory agencies and the Securities and Exchange
Commission," said Greenspan.