Special Bulletin: To the Members of the AICPA

To the Members of the AICPA:

T he events surrounding the Enron bankruptcy have sparked an unprecedented level of public policy discussion and media coverage regarding the accounting profession and our role in our nation’s capital market system. The situation is very fluid and can make the task of timely communication with you, our members, quite complicated. It is, however, a job to which we are firmly committed. This letter is one of the means by which we can accomplish this task.

We’ve heard from many of our members and we share your deep concern over the impact this crisis is having on the confidence that investors and the public have in the work of CPAs. As the national organization for the profession, the AICPA is working hard to communicate the valuable contributions CPAs make every day to the American economy. In every interview with print and broadcast media, we are making the following points as strongly as possible:

There are more than 350,000 CPAs nationwide, employed in industry, government and in over 45,000 public practice firms.

Hundreds of thousands of CPAs do their jobs every day with nothing but the highest level of integrity.

Our profession will not tolerate those who do not abide by the rules.

CPAs contribute to the U.S. economy and support their local communities by providing valuable services and sound advice to clients and employers each and every day.

The two of us, along with other spokespersons for the profession, have been very visible in delivering these messages to the national print, cable and broadcast media in recent weeks. We have participated in numerous interviews with print reporters and have appeared on “MoneyLine” with Lou Dobbs on CNN, “Market Wrap” and “Power Lunch” on CNBC as well as programs on C-SPAN, Bloomberg Radio and National Public Radio. While the AICPA presence in your local press is not as apparent, we are working hard to provide support to state CPA societies and individual members in their efforts to deliver the local perspective on the profession.

In his State of the Union address on January 29, 2002, President Bush spoke of the need for tighter disclosures and more transparency in corporate financial reporting. Our profession has a 100-year tradition of serving the public interest. Consistent with that tradition, we are committed to addressing the issues emerging from this crisis and to suggesting and implementing changes that need to be made, working with the SEC, other regulators and Congress. There are several key issues we face, none of which has a quick or easy solution. But you can rest assured that the AICPA is committing every possible resource to creating a system that not only restores the public’s faith in the country’s financial reporting system but also bolsters the public image of the CPA profession.
Our profession has already begun to address these issues. SEC Chairman Harvey Pitt has proposed a new regulation model for auditors who perform public company audits. Under this proposal, there would be a shift from public oversight to public participation in the peer review and disciplinary systems for members and firms auditing SEC registrants. While we believe that self-regulation has been effective in contributing to the ongoing issuance of reliable financial statements, the profession recognizes the need for improvements. For this reason, we have agreed to support these proposed changes and eagerly await the response of other stakeholders.

A nother area of substantial public debate is auditor independence. While many factors affect auditor independence, much of the media’s coverage has focused on nonaudit services provided to audit clients. The AICPA will not oppose federal legislation restricting the scope of certain services that accountants may provide their public audit clients, specifically internal audit outsourcing and financial systems design and implementation. Publicly held companies are of significant public interest because of their wide range of stakeholders including passive investors. At the same time, however, it must be recognized that privately owned companies and small businesses have unique needs that are substantially different from what public companies require. Because of these differences, the safeguards needed to reduce any threats to independence to an acceptable level may be different for publicly held and privately owned companies.

Let me reiterate that the AICPA is, above all, dedicated to taking whatever steps are necessary to restore public confidence in the capital market system and accounting profession. The profession has zero tolerance for any CPA who does not adhere to the rules that are the hallmark of our reputation as America’s trusted financial advisers.

James G. Castellano, CPA
Chairman of the Board

Barry C. Melancon, CPA
President & CEO

P.S. To keep our members up-to-date on recent activities and our response to them, we have developed a special page on our Web site. For more information, visit www.aicpa.org and click on the flashing green banner.