CPAs and Audit Committees: The Perfect Match.

WHEN OPPORTUNITY KNOCKS, swing open the door. Recent regulatory developments provide CPAs with an excellent opportunity to:

* expand CPA visibility, influence and expertise the business community;

* support U.S. Securities and Exchange Chairman Arthur Levitt's efforts to improve listed companies' financial reporting quality, reliability and transparency;

* enhance investor confidence in the integrity of the financial reporting process; and

* improve securities' pricing efficiency.

A PERFECT MATCH

Last December, the SEC's division of market regulation approved corporate governance rule changes for the New York Stock Exchange, American Stock Exchange and National Association of Securities Dealers. These changes require some 13,000 publicly held companies' audit committee members to be independent, financially literate and have financial management expertise.

Without question, the profile of these audit committee members mirrors the CPA's profile. Public companies can expect to benefit from a CPA director as most CPAs are characteristically very diplomatic, nonthreatening, sensitive, knowledgeable, innovative and flexible--yet compliance oriented. What's more, a CPA's presence as an exemplary audit committee member would be welcomed when markets turn sour and trial attorneys look for weaknesses on behalf of clients who have incurred losses.

Under the NYSE rules, at least one audit committee member must satisfy the financial management expertise criteria by June 14, 2001. The AMEX and NASD rules are similar, but include some differences that should be verified.

ACT NOW

CPAs have a one-time opportunity to lift themselves as a group to positions of visibility, influence and service to the business, regulatory and investing community. This is a time when personal ambition must be sacrificed for the benefit of the profession as a whole to be successful. I encourage each of you to immediately market the talents of your CPA peers to listed company executives, independent directors and legal counsel, whether your peers are officers, committee chairs, financial planners, industry specialists or other specialized professionals.

If you are a CPA who works for a publicly held company, reflect on the CPA peers you know from an industry association or a CalCPA chapter or committee, and recommend one as a candidate for membership on your company's board of directors or audit committee.

Although CPAs in Big Five firms are not likely candidates for audit committees due to independence restrictions, they might recommend a retired Big Five partner who would not have the same independence restrictions, or another peer with whom they have a professional acquaintance. These recommendations should be made to company executives and legal counsel.

Other CPAs in public practice, who have a tax, financial planning or eldercare relationship with a listed company's independent director, CEO or outside counsel, also might recommend one of their peers as a candidate for membership on their client's company board of directors or audit committee.

BENEFITS ABOUND

From personal experience, I can wholeheartedly recommend serving as a member of a company's board of directors and audit committee. The activity is financially, socially and intellectually rewarding. Annual compensation can range from $5,000 to $300,000, while meetings are often held at resort locations. The time commitment for attending meetings varies from annually to monthly, and you can expect other independent directors to be bright, friendly and intelligent.

Since regulators plan to revisit compliance with the new audit committee requirements after June 2001, listed companies will be restructuring their audit committees in anticipation of the next proxy season. This means the time for CPAs to talk to their clients and contacts is now, well before year-end proxy statements are drafted.

Recommend your CPA peers today.

Kenneth Domingues is a Redwood City-based CPA whose consulting practice includes securities arbitration, expert witness work and financial planning. He is a former chief accountant for the SEC division of investment management.