Council approves proposals to improve timeliness, transparency of disciplinary process; members to vote on the two proposals that require bylaw amendments.

At its spring meeting, the AICPA Council approved three proposals that were submitted by the Professional Ethics Executive Committee (PEEC) to improve the timeliness and transparency of the AICPA's disciplinary process. Two of the proposals require amendments to the AICPA bylaws; Council thereby authorized a member referendum on those proposals. The third proposal became effective upon Council's approval. Taken together, these enhancements augment the Institute's disciplinary process and continue to demonstrate that our members hold themselves to the highest professional standards and are intolerant of those who break the rules. Brief descriptions of the proposed bylaw amendments follow. More information is available online at www.aicpa.org/enforcement.

The first of these proposals would allow the PEEC to sanction an AICPA member without an investigation under the automatic disciplinary provisions in section 7.3 of the bylaws (which currently allows for automatic discipline as a result of certain criminal or income tax related violations or state board of accountancy actions) if the member has been sanctioned by a governmental agency or other organization that has been approved by the PEEC and the AICPA Board of Directors. For a government agency to be eligible for approval, it must be one which has authority to prohibit a member from practicing before it or another government agency or from serving as a director, officer or trustee of an entity (under consideration would be the Securities and Exchange Commission and the Internal Revenue Service). For any other organization to be eligible for approval, it must be one that is granted authority under law or regulation to regulate accountants (such as the Public Company Accounting Oversight Board). In addition to the amendment to section 7.3, the proposal will also require a conforming change to section 7.4.5 of the bylaws.

The proposal also would allow the PEEC to terminate the membership of a member who is subjected to a sanction that is of a permanent nature by an approved government agency or other organization and to suspend a member who is suspended by the body. If an approved body or state board metes out any other sanction, as a disciplinary measure, the member would be subjected to an appropriate sanction based on sanctioning guidelines developed by the PEEC and approved by the AICPA Board of Directors.

Furthermore, under the current bylaw, a member has a right to petition the trial board that the automatic provisions should not be applied (and that the matter be investigated by the AICPA's ethics division). The proposal would grant the PEEC a similar right to petition for non-application of the bylaw provisions to give it the flexibility to suggest a more or less restrictive sanction where appropriate.

The other proposal on which members will vote is a measure for expanded transparency of the AICPA's disciplinary findings. This amendment to bylaw section 7.6 would clarify that Council may authorize additional disclosures with regard to disciplinary actions and investigations.

The AICPA bylaws require that the proposed amendments to the bylaws be submitted to the members between 90 and 180 days after the Council discussion of the matter. Currently, it is anticipated that the member ballots will be mailed in Aug. or early Sept.

As previously mentioned, Council also approved a proposal that did not require a vote of the membership in order to become effective. Council amended its resolutions under bylaw sections 3.6.2.2 and 7.4 related to settlement agreements. The amendments to those Council resolutions mean that the PEEC will now be able to offer, in appropriate cases, an admonishment sanction to AICPA members who violate the Code of Professional Conduct.

Members Invited to Express Views on Bylaw Changes

The Institute invites members to express their views on the two proposals included in the member referendum. Representative letters and/or a summary of member views will be published by the Institute. Send letters of 100 words or less (type or print) to Donna Wolf, AICPA, 1211 Avenue of the Americas, New York, NY 10036-8775; fax: [phone]; or e-mail to: [e-mail]. The deadline for receipt of letters is Monday, July 21, 2003. Members will receive additional information about the referendum in future issues of The CPA Letter.