NEW INDEPENDENCE STANDARDS BOARD BEGINS ITS WORK WITH A BANG
The new Independence Standards Board held an all-day meeting on October 20, 1997, to begin to gain an understanding of the issues involved. The Independence Standards Board was established earlier this year to set standards relating to independence issues for auditors of public companies. The board is comprised of eight members, four with a public interest perspective and four from the accounting profession. Chairing the board is William T. Allen of the Delaware Chancery Court.
The daylong program included presentations from a number of groups:
* Academic Panel. Professors Baruch Lev of New York University, Gary Previts of Case Western Reserve, and William Kinney of the University of Texas reviewed empirical studies of auditor independence.
* Securities and Exchange Commission. Chief Accountant Michael Sutton and others presented their view of the problems to be addressed and the values to be protected.
* Public Oversight Board of the SECPS. A.A. Sommer, Jr., Donald Kirk, and Charles Bowsher spoke on behalf of the POB and as individuals with a strong public interest.
* White paper on auditor independence. Commissioned by the AICPA and prepared by Harvey Pitt of Fried, Frank, Harris, Shriver & Jacobson, the paper proposes a new conceptual framework for auditor independence.
* Financial Analysts. Gabrielle Napolitano, Goldman Sachs & Co., and Gerald White, Grace and White, Inc. spoke on behalf of this important user group.
Also present was SEC chair Arthur Levitt and newly appointed executive director of the Independence Standards Board, Arthur Siegel. Siegel, prior to the appointment, was a partner of Price Waterhouse and chair of the AICPA's SECPS Executive Committee.
As explained in this month's cover story--an interview with Chief Accountant Michael Sutton--a first step for the new board is to educate themselves on the issues. From there they can map out a strategy for moving forward, which may include the development of a conceptual framework for auditor independence. The interview discusses the reasons why the board was established from the point of view of the SEC. *
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