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Disciplinary action rules proposed for accountants and accounting firms. (Announcements).

The federal bank and thrift regulatory agencies on December 17, 2002, invited public comment on proposed rules governing their authority to take disciplinary actions against independent public accountants and accounting firms that perform audit and attestation services required by section 36 of the Federal Deposit Insurance Act.

The proposed rules would establish procedures under which the agencies could, for good cause, remove, suspend, or bar an accountant 6r firm from performing audit and attestation services for insured depository institutions with assets of $500 million or more. They would permit immediate suspensions in limited circumstances.

Under the proposed rules, violations of law, certain negligent conduct, reckless violations of professional standards or lack of qualifications to perform auditing services would be considered good cause to remove, suspend, or bar an accountant or firm from providing services for such an insured institution. Also, under the proposed rules, an accountant or accounting firm may not perform audit services as prescribed under section 36 if the accountant or firm has been removed, suspended, or debarred by one of the agencies, or if the Public Company Accounting Oversight Board, the Securities and Exchange Commission, or a state licensing authority takes certain disciplinary actions against the accountant or firm.

The proposed rules are being issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision. Although they would amend each agency's rules of practice separately, they would have uniform application for each agency.

Comments are due sixty days after publication in the Federal Register.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
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Publication:Federal Reserve Bulletin
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 1, 2003
Words:266
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