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 WASHINGTON, March 18 /PRNewswire/ -- The American Institute of Certified Public Accountants (AICPA) today endorsed legislation that ensures earlier disclosure of possible fraud and other illegal activities perpetrated by corporate management. The institute said enactment of H.R. 574, the "Financial Fraud Detection and Disclosure Act," should bolster public confidence in the nation's financial reporting system by requiring auditors to provide earlier public notification of possible misconduct.
 The profession has worked closely with the House Telecommunications and Finance Subcommittee leadership to ensure that the setting of auditing standards remains in the private sector. This language was not part of previous legislation. Under the revised version, principal responsibility for setting auditing standards will remain in the private sector, with SEC authority to modify or supplement the standards in certain areas.
 "By requiring more rapid notification of corporate illegal activities and reaffirming an auditor's obligation to assess an audited company's survivability, this legislation will improve the early warning against management fraud," said Jake Netterville, AICPA chairman.
 "Moreover, the legislation does not create a new bureaucracy or mandate government intrusion into the accounting profession. The primary responsibility for setting auditing standards will stay where the expertise is -- the private sector," Netterville added.
 "We believe this legislation demonstrates the ability of public officials and the private sector to work together to maintain a financial reporting system that meets public needs. The accounting profession is committed to a financial reporting system that provides investors the information they require, and our Special Committee on Financial Reporting is actively exploring ways to make financial reports more relevant and valuable to all financial decision makers."
 Following is the text of a letter to Rep. Edward J. Markey (D-Mass.), chairman of the Telecommunications and Finance Subcommittee of the Committee on Energy and Commerce, from Netterville:
 I am pleased to inform you that the American Institute of Certified Public Accountants (AICPA) supports the enactment of the amended version of H.R. 574, the "Financial Fraud Detection and Disclosure Act." When enacted, the measure will provide for more rapid notification to the SEC of illegal acts that have not been properly addressed. By passing this bill, Congress will send a strong signal to public companies and their auditors that the public wants and expects reliable financial reporting. As you know, the profession has a longstanding commitment to promote public trust in the financial reporting system that is critical to economic growth and believes that this legislation is a further step toward that goal.
 The amendment to the bill addresses our major concern by making it clear that the principal responsibility for setting auditing standards will remain in the private sector, subject to appropriate oversight by the SEC. It provides that the SEC may modify or supplement the auditing standards in the areas of the detection of illegal acts, related party transactions, and the evaluation of an entity's ability to continue as a going concern with respect to audits of registrants under the Exchange Act if it determines that the private sector standard-setting body is unable or unwilling to take appropriate action on a timely basis.
 We wish to commend you, Congressmen Wyden and Tauzin, and the Republican leadership of the Subcommittee for their efforts in seeking a resolution to the profession's concern. We also wish to acknowledge the hard work and effort of the staff who worked successfully to resolve this matter.
 -0- 3/18/93
 /CONTACT: Shirley Twillman, 202-434-9220, or Brian Salisbury, 212-596-6108, both for the American Institute of Certified Public Accountants/

CO: American Institute of Certified Public Accountants ST: District of Columbia IN: SU: LEG

IH-MH -- DC018 -- 7583 03/18/93 15:29 EST
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Publication:PR Newswire
Date:Mar 18, 1993

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