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Accounting/auditing reform legislation introduced in US Congress

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17 Feb 2002

Legislation known as the Corporate and Auditing Accountability, Responsibility, and Transparency Act (H.R.3763) has been introduced in the US Congress.

The bill would:
  • Establish a public regulatory organisation to oversee the auditing profession
  • Prohibit auditors from offering financial information system design or implementation services or internal audit services to audit clients
  • Require 'real time' disclosure of off-balance sheet financing, relationships with unconsolidated entities, and insider trading
  • Recommend that the SEC require management to explain, where material, its choice of accounting principles from among the different available accounting principles, the judgments made in their application, and the likelihood of materially different reported results if different assumptions of conditions were to prevail
  • Increase the SEC's budget from $480 million to $700 million
  • Require the SEC to conduct thorough reviews of the audits of the largest and most widely traded companies
  • Require the SEC to consider ways to reduce financial analysts' conflicts of interest.
Click for Press Release (PDF 52k). Click for Full Text of H.R. 3763 (PDF 139k).

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