Chair's corner.

This month I want to touch briefly on a number of pending issues. First, the Special Committee on State Regulation has been extremely busy working with state societies and other interested parties to respond to legislative initiatives in over 16 states. Many of these Sarbanes-Oxley type legislative initiatives propose to go well beyond addressing services to public companies and would apply many of the provisions of S-O to audits of private companies and other non-SEC registered companies. While some of the provisions may be appropriate in the non-SEC setting, many would not enhance audit quality and would have the unintended consequence of significantly increasing the cost and complexities of obtaining professional services by our nation's many small and growing businesses. We will continue to work closely with state societies and members to address these legislative and regulatory initiatives in order to promote uniformity of state regulation for the profession.

I want say a special thanks to our Tax Executive Committee and its task force that has worked diligently during the past several weeks to address many issues relating to tax consulting services. There has been considerable media attention on tax consulting services which has brought to the surface the continuing struggle by the Internal Revenue Service and others to define tax strategies that may be inappropriate. During this busiest time of the year, many of our CPA tax professionals have been at the forefront of dialogue with the IRS and others on this important issue. The issues that underlie the debate are very complicated and arriving at appropriate guidance that fits all situations remains difficult. As this issue continues to move forward, the profession will remain an active participant.

Our various committees that deal with the public company reporting environment also have been very busy. We have responded to every request from the Public Company Accounting Oversight Board to provide information and assist as it prepares for its new responsibilities. We are committed to a smooth transition for those programs that will become the responsibility of the PCAOB. As we prepare for transition, we will not diminish our own activities in those areas prematurely so that capital market stakeholders can be assured of continued coverage.

In the capital market arena, rebuilding investor confidence continues to be the primary goal of the AICPA's Antifraud and Corporate Responsibility Program. The program, which launched in Oct. 2002 with the release of the new fraud audit standard, SAS No. 99, covers a wide array of initiatives impacting all sectors of the CPA profession.

As I have noted in many of these columns and in separate presentations to CPAs across the country, all of us need to join in the effort to restore public trust in the accounting profession. One such activity that will be beneficial in this regard is to make sure that all CPAs involved in the preparation or audits of financial statements, whether from within the corporation, the internal audit function or as the outside auditor, are alert to the possibility of fraud or inappropriate accounting treatments. As you plan your continuing professional education this year, we are asking all CPAs in the audit environment to devote at least 10% of their studies to the detection and prevention of fraud. This month's CPA Letter includes information on CPE courses on fraud and other fraud related initiatives.

I have had numerous opportunities over the past several months to discuss corporate governance and the implications of the Sarbanes-Oxley Act before audiences of corporate executives and audit committee members. Most of these settings have included professionals from other disciplines as well. I have been encouraged by a shared sense among all stakeholders in the capital market system that we all have things to do to improve, and that we can make things better.

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