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NCJ Number: 65584 Find in a Library
Title: MEMORANDUM OF COMMENT BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS ON THE STUDY BY THE STAFF OF THE SUBCOMMITTEE ON REPORTS, ACCOUNTING AND MANAGEMENT (FROM ACCOUNTING AND AUDITING PRACTICES ... NCJ-65581)
Corporate Author: American Institute of Certified Public Accountants
United States of America
Date Published: Unknown
Page Count: 30
Sponsoring Agency: American Institute of Certified Public Accountants
Jersey City, NJ 07311-3881
National Institute of Justice/
Rockville, MD 20849
Sale Source: National Institute of Justice/
NCJRS paper reproduction
Box 6000, Dept F
Rockville, MD 20849
United States of America
Document: PDF
Type: Legislative/Regulatory Material
Language: English
Country: United States of America
Annotation: THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) RESPONDS TO A SENATE SUBCOMMITTEE'S STAFF REPORT THAT ADVOCATES MORE EXTENSIVE GOVERNMENT CONTROL OVER THE SETTING OF FINANCIAL REPORTING STANDARDS.
Abstract: THE SUBCOMMITTEE ON REPORTS, ACCOUNTING, AND MANAGEMENT'S STAFF REPORT, 'THE ACCOUNTING ESTABLISHMENT,' INDICATES THAT THE ENTIRE FINANCIAL ACCOUNTING AND REPORTING PROCESS IN THE UNITED STATES IS DOMINATED BY A GROUP OF EIGHT LARGE ACCOUNTING FIRMS, WHICH IN TURN DOMINATE THE AICPA, THE BODY THAT SUPPLIES MEMBERS TO SERVE ON PRIVATE SECTOR BOARDS TO WHICH THE SECURITIES AND EXCHANGE COMMISSION HAS ENTRUSTED THE RESPONSIBILITY FOR SETTING FINANCIAL REPORTING STANDARDS. SUCH AN ARRANGEMENT IS ALLEGED BY THE STAFF REPORT TO CREATE A BIAS IN THE SETTING OF ACCOUNTING STANDARDS THAT FAVORS CORPORATE INTERESTS, WHILE THE POLICYMAKING INTERESTS OF THE GOVERNMENT AND THE PUBLIC ARE DEEMPHASIZED. SUCH BIAS, STATES THE STAFF REPORT, CAN ONLY BE ELIMINATED BY ESTABLISHING GREATER INDEPENDENT GOVERNMENT CONTROL OVER THE SETTING OF FINANCIAL STANDARDS. THE AICPA RESPONSE CHALLENGES THE EXTENT TO WHICH THE 'BIG EIGHT' COMPANIES CONTROL THE AICPA AND THE PRIVATE BODY (THE FINANCIAL ACCOUNTING STANDARDS BOARD) THAT DEVELOPS FINANCIAL REPORTING STANDARDS. FURTHER, THE AICPA RESPONSE ARGUES THAT FAILURES IN EXISTING PROCEDURES FOR SETTING STANDARDS CANNOT BE DIRECTLY ATTRIBUTED TO THE SYSTEM FOR SETTING SUCH STANDARDS, BUT TO THE INEVITABLE WEAKNESSES OF ANY SYSTEM IN ELIMINATING ALL PROBLEMS. THE INDEPENDENCE OF PRIVATE ACCOUNTING BODIES IN SETTING STANDARDS AND THE INTEGRITY AND COMMITMENT OF SUCH BODIES TO THE PUBLIC INTEREST IS AFFIRMED. THE STAFF REPORT'S PROPOSAL THAT A GOVERNMENT BODY BE ESTABLISHED TO HAVE EXCLUSIVE RESPONSIBILITY FOR THE SETTING OF ACCOUNTING STANDARDS IS BELIEVED UNNECESSARY AND A POSSIBLE THREAT TO EXISTING CONSTRUCTIVE EFFORTS TO UPGRADE ACCOUNTING STANDARDS. EXCESSIVE GOVERNMENT INTERVENTION IN PRIVATE SECTOR ACCOUNTING ISSUES IS ALSO FEARED FROM THE STAFF'S RECOMMENDATIONS.
Index Term(s): Auditing standards; Federal government; Testimony
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http://www.ncjrs.gov/App/publications/abstract.aspx?ID=65584

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