The Act creates a five-member Public Company Accounting Oversight Board (Board), with authority to set and enforce auditing, attestation, quality control and ethics (including independence) standards for public companies. It is also empowered to inspect the auditing operations of public accounting firms that audit public companies and impose disciplinary and remedial sanctions for violations of the Board's rules, securities laws and professional auditing standards.
Among other provisions, the Act lists eight types of services that are "unlawful" if provided to a publicly held company by its auditor:
2. Information systems design and implementation.
3. Appraisals or valuation services.
4. Actuarial services.
5. Internal audits.
6. Management and human resources services.
7. Broker/dealer and investment banking services.
8. Legal or expert services related to audit services.
A "catch-all" category authorizes the Board to determine by regulation any service it wishes to prohibit. Other nonaudit services--including tax services--require pre-approval by the audit committee on a case-by-case basis. Pre-approved nonaudit services must be disclosed to investors in periodic reports.
The Act does not define "expert" services; it is not known how broadly the Board or the SEC will define this term. Some traditional tax services may be construed as "expert" services that any firm providing audit services to publicly held audit clients cannot also provide. The AICPA will work with the Board or the SEC to help it understand the importance of auditors providing tax services for publicly held audit clients. In addition, tax services performed by an auditor for a publicly held company would require pre-approval by the client's audit committee.
For a detailed description of the Act, see www.aicpa.org/info/sarbanes_oxley_summary.htm.
Federal tax burden per capita, FYs 1992-2002 Current Constant dollars 2002 dollars '92 $4,163 $5,010 '93 $4,381 $5,150 '94 $4,710 $5,423 '95 $4,985 $5,617 '96 $5,315 $5,875 '97 $5,716 $6,198 '98 $6,142 $6,578 '99 $6,443 $6,805 '00 $7,046 $7,277 '01 $6,875 $6,948 '02e $6,918 $6,918 Source: Tax Foundation Note: Table made from bar graph.
Circular 230 Alert?
The IRS released final regulations (TD 9011) on Circular 230 non-tax-shelter matters, located at IRB 2002-33, 356, and at www.irs.gov/bus_info/ bullet.html. On that webpage, select "Internal Revenue Bulletin 2002-33 Weekly," then click "Retrieve Selected Files." Treasury is expected to re-propose the Circular 230 tax-shelter provisions soon.
|Printer friendly Cite/link Email Feedback|
|Author:||Laffie, Lesli S.|
|Publication:||The Tax Adviser|
|Date:||Oct 1, 2002|
|Previous Article:||Split-dollar life insurance. (From The IRS).|
|Next Article:||2 great tax strategies many overlook.|