Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    American Institute of Certified Public Accountants

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      United States of America


    2. Name of member body:
      American Institute of Certified Public Accountants

      Or please specify name:



    3. Individual responsible for preparation:
      James O'Malley


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1977



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      Interamerican Accounting Association



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Uniform Commercial Code
      b). the Enacting body: The uniform law was approved by a non-governmental body, the National Conference of Commissioner on Uniform State Laws (NCUSL). It is then simply a legislative proposal addressed to fifty state legislatures. The final draft was prepared in the 1950s and was widely adopted by the states in the 1960s.
      c). date the Act or Code came into force: 10 / 1977


    25. How can IFAC obtain a copy of the Act or Code?
      A copy may be obtained at http://www.law.cornell.edu/ucc/ucc.table.html. A matrix indicating which states have adopted which provisions of the code may be obtained at http://www.law.cornell.edu/uniform/ucc.html.


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): (Note: The Code does not set out requirements for an entity to prepare finanical statements.
      Private companies   Other (please specify):
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities As specified by Section 13(a) of the Securities Act 1934 - see AICPA Attachment for additional information.
      Private companies Most private companies are not required to prepare annual or quarterly financial statements. There are exceptions, for example, in some regulated industries, or entities that have government contracts, or receive government funding.
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities However, not under the Uniform Commercial Code but the Securities Exchange Act 1934. Listed entities are required to have their annual financial statements audited under the Securities Exchange Act of 1934 (section 13(a)(2)). Refer to the AICPA Attachment for additional information.
      Private companies Most private companies are not required to have their financial statements audited. There are exceptions, for example, in some regulated industries, or entities that have government contracts, or receive government funding. Also, other funding sources may impose audit requirements on private entities, for example private investors, lenders or other creditors.
      Governmental
      Not-for-profit
      Other (please describe)
      Other (please describe)


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      The AICPA Code of Conduct does not require the rotation of auditors or audit firms performing audits; however, the Sarbanes-Oxley Act of 2002 states that it shall be unlawful for a registered public accounting firm to provide audit services to an issuer if the lead (or coordinating) audit partner (having primary responsibility for the audit), or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the 5 previous fiscal years of that issuer.



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      Section 13 (a) of the Securities Exchange Act of 1934. See the response to questions 28 and 29.

    2. the Enacting body(ies)

      The Securities Exchange Act of 1934 was approved by the United States Congress.

    3. the latest amendment date?

      The latest major amendment to the Securities Exchange of 1934 was mde by the Sarbanes-Oxley Act of 2002, which was approved by the US Congress in July 2002.


    35. How can IFAC obtain a copy of the Legal authority?
      A copy of the act is available at www.law.uc.edu/CCL34Act/index.html


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      A company that meets the deifnition of small-business issuer may use different forms for registration of its securities under the Securities Exchange Act, and for its quarterly and annual reports. A company that meets the definition of foreign issuer may use different forms for registration of its securities under the Securities Exchange Act, and for its quarterly and annual reports.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      The AICPA Code of Conduct does not require the rotation of auditors or audit firms performing audits; however, the Sarbanes-Oxley Act of 2002 states that it shall be unlawful for a registered public accounting firm to provide audit services to an issuer if the lead (or coordinating) audit partner (having primary responsibility for the audit), or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the 5 previous fiscal years of that issuer.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity Securities Exchange Act of 1934 as amended by the Sarbanes Oxley Act of 2002 07/2002 Public Company Accounting Oversight Board
      Other (please describe) Private Companies AICPA Rule 203, rules of professional conduct 05/2004 Auditing Standards Board
      Other (please describe) Government organizations, programs, activities, and functions, and of government assistance rec'd by contractors, nonprofit organizations, and other non-govt org. Certain law, regulations, and contrancts requrie auditors to follow generally accepted govt auditing standards promulgated by the Comptroller General of the US. Refer to the AICPA Attachment for additional information. United States General Accounting Office
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      The Securities Exchange Act of 1934 is available at http://www.law.uc.edu/CCL/34Act/index.html

      American Institute of Certified Public Accountants Rule 203, Rules of Professional Conduct is available upon request from the AICPA.

      The Inspector General Act of 1978 is available at http://www.access.gpo.gov/uscode/title5a/5a_2_.html.

      The Chief Financial Officers Act of 1990 is available at http://wwwoirm.nih.gov/itmra/cfoact.html.

      The Single Audit Act Amendments of 1996 is available at http://www.ignet.gov/single/saamend.html.


      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (Public Company Accounting Oversight Board)


    44. For Public Company Accounting Oversight Board, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      The PCAOB is a private-sector, non-profit corporation, created by the Sarbanes-Oxley Act of 2002.

      b. Name of standards

      Auditing Standards


    45. How many voting members does the standard-setting body have?
      5


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      From the Sarbanes-Oxley Act of 2002: Board members are appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.

      Two members, and only 2 members, of the Board shall be or have been certified public accountants, provided that, if 1 of those 2 members is the chairperson, he or she may not have been a practicing certified public accountant for at least 5 years prior to his or her appointment to the Board.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      From the Sarbanes-Oxley Act of 2002: The Securities and Exchange Commission, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury.


    49. What is the term of appointment for members?
      5 Year(s)


    50. For how many years has the standard-setting body been in existence?
      2 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      101,247,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    52. To what entity is the standard-setting body accountable?
      From the Sarbanes-Oxley Act of 2002: The Board shall submit an annual report (including its audited financial statements) to the Securities and Exchange Commission, and the Commission shall transmit a copy of that report to the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives.


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Any questions regarding the PCAOB's due proces should be addressed to the PCAOB.

    2. accessibility of meetings (i.e., public or private)

      Any questions regarding the PCAOB's due proces should be addressed to the PCAOB.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Any questions regarding the PCAOB's due proces should be addressed to the PCAOB.

    4. other relevant due process activities



    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)


    Section 5B -- Standard-Setting (Auditing Standards Board)


    44. For Auditing Standards Board, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      The Auditing Standards Board (ASB) is the senior technical committee of the AICPA.

      The American Institute of Certified Public Accountants is the national, professional organization for all Certified Public Accountants.

      Note: The Committee on Auditing Procedure was formed in 1939. In 1972, it was reconstituted as the Auditing Standards Executive Committee to reflect a shift from providing audit guidance to promulgating auditing standards. It was reconstituted again in 1978 as the Auditing Standards Board (ASB).


      b. Name of standards

      Statements on Auditing Standards (SAS)


    45. How many voting members does the standard-setting body have?
      19


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Note: Although the members are involved on a voluntary basis, they may request reimbursement for travel expenses. They also may request a stipend of $50 per hour for up to 800 hours per year for time spent on ASB activities. This makes it easier for small-firm practitioners to participate, and makes it easier to achieve the appropriate balance between the large- and small-firm practitioners. Traditionally, the large-firm members do not request the reimbursement for travel expenses or the stipend.


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Big Four Firms (International): 4
      Non-Big Four Firms(Local, Regional, and Smaller National/International): 5
      NASBA (National Association of State Boards of Accountancy): 5
      Nonfirm Members: 5

      The ASB chair and audit and attest standards director review the list of applicants for service on ASB. This list includes individuals that the National Association of State Boards of Accountancy submits for our consideration, individuals who apply through our committee applications process, and individuals recommended by the Big Four firms. In nominating individuals from the list submitted by NASBA, the ASB chair and audit and attest standards director look for individuals who complement the skills and knowledge of practitioners from the Big Four firms and local, regional, and smaller national firms. Nonfirm members can be selected from among academics, users and preparers of financial statements, and government and other regulators. In nominating nonfirm members, the ASB chair and audit and attest standards staff look for individuals who can provide a perspective that practitioners cannot provide but that will help the ASB address the needs of users of non-issuer financial statements in a timely manner and restore the public’s trust in the auditor’s report.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The AICPA’s board of directors reviews the nominations and, after careful consideration, appoints the individuals to the ASB for three consecutive one year terms. Although the board of directors appoints the individuals to the ASB, it does not involve itself in the technical issues before the ASB and is committed to protecting the ASB’s autonomy.


    49. What is the term of appointment for members?
      3 Year(s)


    50. For how many years has the standard-setting body been in existence?
      65 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1,811,438

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.000



    52. To what entity is the standard-setting body accountable?
      The ASB is the senior technical committee of the AICPA designated to issue auditing, attestation, and quality control standards and guidance. It is authorized to make public statements on matters relating to auditing, attestation, and quality control standards without clearance from Council or the Board of Directors. Ultimately, the ASB is accountable to the AICPA Council.


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Statements on Auditing Standards, Statements on Standards for Attestation Engagements and Statements on Quality Control Standards:

      These publications are standards issued by the ASB. Rule 202 of the AICPA Code of Professional Conduct requires a member who performs an audit to comply with standards promulgated by the ASB. The ASB develops and issues standards in the form of Statements on Auditing Standards, Statements on Standards for Attestation Engagements, and Statements on Quality Control Standards (together, "ASB Statements") through a due process that includes deliberation in meetings open to the public, public exposure of proposed ASB Statements, and a formal vote.

      Interpretative Publications:

      Interpretative Publications are issued to provide guidance on the application of ASB Statements. The Audit and Attest Standards staff develops interpretations, sometimes with the assistance of ASB members or other volunteers. Interpretations are reviewed by the Audit Issues Task Force (see Note 1 below), and approved by the ASB Chair and the Director. Interpretations are issued under the authority of the ASB after all ASB members have been provided an opportunity to consider and comment on whether the proposed interpretation is consistent with the ASB Statements. ASB members are provided at least two weeks to consider and comment on proposed interpretations.

      Note 1: The ASB Chair and the Director are responsible for preparing short- and longer-range operating and project plans for the ASB, including an agenda of projects and their priorities. The ASB Chair and the Director also are responsible for planning and monitoring the ASB's work. To assist them in preparing such operating plans and other administrative and technical responsibilities, the ASB Chair, in consultation with the Director, nominates, and the ASB approves, a slate of ASB members to serve on the Audit Issues Task Force.


    2. accessibility of meetings (i.e., public or private)

      Those portions of ASB meetings relating to (a) the establishment of standards through ASB Statements and (b) other auditing, attestation and reporting matters directly affecting the public interest are open to the public. Portions of meetings dealing with matters of an administrative or necessarily confidential nature, such as meeting arrangements, establishment of task forces, and consideration of advice of AICPA counsel, need not be open to the public. Meetings of the subcommittees and task forces of the ASB are not open to the public; however at the discretion of the ASB Chair, or at the discretion of the chair of the subcommittee or task force (after discussing the request with the ASB Chair), interested parties may be invited to attend any or all meetings of any ASB subcommittee or task force.

      The ASB holds five meetings per year (each meeting is 2.5 days).


    3. approval process for final standards (i.e., majority required to approve final standards)

      The matters on which votes may be taken can be categorized as follows: (1) votes on a motion to issue an exposure draft of a proposed ASB Statement or a final ASB Statement or (2) votes on motions relative to other specific actions or to indicate preferences on specific issues.

      Issuance of an exposure draft of a proposed ASB Statement or a final ASB Statement requires the written affirmative approval of two-thirds of all ASB members. In voting on issuance of an exposure draft of a proposed ASB Statement or a final ASB Statement, Board members may either:
      • approve issuance of the proposed or final ASB Statement, or
      • dissent to issuance of the proposed or final ASB Statement.

      Members who dissent to issuance of a proposed or final ASB Statement may request that the reasons for the dissent be included in the published proposed or final ASB Statement.

      Votes on all other matters are by members and are effected by show of hands, by written ballot, electronic ballot, or by telephone poll conducted by the ASB Chair or the staff, as determined by the ASB Chair in each instance. A simple majority is sufficient to carry a motion. The ASB year, which normally expires annually at the time of the AICPA annual meeting, may be extended by the Board of Directors for purposes of voting on a specific document(s).


    4. other relevant due process activities



    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      13 Day(s)


    Section 5B -- Standard-Setting (United States General Accounting Office)


    44. For United States General Accounting Office, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      United States General Accounting Office, Comptroller General as advised by the
      Advisory Council on Government Auditing Standards. Note: technically, the Comptroller General sets the standards; however, the answers that follow are related to the Advisory Council on Government Auditing Standards. The US General Accounting Office has been in existence for 83 years. The Comptroller General first issued standards for government auditing in 1972; major revisions were made in 1981, 1988, 1984, and 2003.

      The General Accounting Office is the audit, evaluation, and investigative arm of the US Congress.

      United States General Accounting Office, Comptroller General as advised by the
      Advisory Council on Government Auditing Standards. Note: technically, the Comptroller General sets the standards; however, the answers that follow are related to the Advisory Council on Government Auditing Standards.


      b. Name of standards

      Generally Accepted Government Auditing Standards (GAGAS)


    45. How many voting members does the standard-setting body have?
      25


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Collectively, they provide strong knowledge of financial, compliance, and performance auditing and program evaluation at all levels of government. There is a mix of both practitioners (from both large and small firms) and users at all levels of government, as well as academics.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      They are appointed by the Comptroller General. The new members are selected from nominations received from relevant professional organizations.


    49. What is the term of appointment for members?
      3 Year(s)


    50. For how many years has the standard-setting body been in existence?
      32 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      432,000,000 GAO budget (not just for standard-setting)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    52. To what entity is the standard-setting body accountable?
      United States Congress


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Standards are exposed to the public in accordance with the Administrative Procedures Act, the pertinent part which can be found at http://www.archives.gov/federal_register/public_laws/administrative_procedure_act/553.html.

    2. accessibility of meetings (i.e., public or private)

      Meetings are open to the public in accordance with the Administrative Procedures Act, the pertinent part which can be found at http://www.archives.gov/federal_register/public_laws/administrative_procedure_act/552b.html. At the end of every meeting, there is an open comment-period where participants can provide comments and feed-back.

      They meet approximately 4-6 days.


    3. approval process for final standards (i.e., majority required to approve final standards)

      The Advisory Council, upon reaching consensus, will make recommends to the Comptroller General, who decides on the final standards. The Advisory Council does not have a voting policy.

    4. other relevant due process activities

      The Comptroller General and the Advisory Council often meet with constituents when developing projects. In addition to the due-process procedures, the Comptroller General often seeks comments from specific constituents throughout the process.


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      6 Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice AICPA Code of Professional Conduct, State Boards of Accountancy rules and regulations, SEC Rule 2-01 of Regulation S-X. See AICPA Attachment for responses to questions 55-66 relating to State Boards of Accountancy and SEC Rule 2-01. AICPA Code of Professional Conduct 12/2003 AICPA Professional Ethics Executive Committee
      Professional Accountants in Business AICPA Code of Professional Conduct and State Boards of Accountancy rules and regulations, SEC rules and regulations. See AICPA Attachment for responses to questions 55-66 regarding the State Boards and SEC regulations. AICPA Code of Professional Conduct 12/2003 AICPA Professional Ethics Executive Committee
      Professional Accountants in the Public Sector AICPA Code of Professional Conduct and Generally Accepted Government Auditing Standards, Amendment No. 3. See AICPA Attachment for information regarding GAGAS Amendment No. 3 AICPA Code of Professional Conduct 12/2003 AICPA Professional Ethics Executive Committee
      Other (please describe) Professional Accountants in Public Practice PCAOB 04/2003 PCAOB

      a. How can IFAC obtain copies of these documents?

      AICPA Code can be obtained at http://www.aicpa.org/about/code/index.htm.

      SEC independence rules can be obtained at www.sec.gov.

      PCAOB rules can be obtained at http://www.pcaobus.org/rules/Release2003-006.pdf

      The GAO independence rules can be obtained at http://www.gao.gov/govaud/ybk01.htm

      Access to the various state boards rules can be obtained at http://www.aicpa.org/states/info/index.htm


      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (AICPA Professional Ethics Executive Committee)


    56. For AICPA Professional Ethics Executive Committee, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      The Professional Ethics Executive Committee (PEEC) is the senior technical committee of the AICPA.

      Note: The professional Ethics Executive Committee in its current form dates back to 1971. However, the Committee’s earliest predecessor was the American Association of Public Accountants’ Committee on Ethics, which was formed in 1906 to develop ethics standards to which its members should adhere.


      b. Name of standards

      AICPA Code of Professional Conduct


    57. How many voting members does the standard-setting body have?
      20


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: The PEEC is comprised of 20 members. Seventeen members are volunteers while three members are from the public (non-CPAs) and compensated by the AICPA.


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members are appointed so that there is representation from public practice (including small, medium and large firms), business and industry, government, educators, state regulators and the public. Relevant experience with respect to ethics and independence is sought.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Director of the AICPA Professional Ethics Division, in consultation with the PEEC Chair, nominates the members of the PEEC. The AICPA Board of Directors approves nominations for members of the PEEC.


    61. What is the term of appointment for members?
      3 Year(s)


    62. For how many years has the standard-setting body been in existence?
      98 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      3.500.000 is the total budget which includes standard-setting, enforcement activities, and salaries.

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.000



    64. To what entity is the standard-setting body accountable?
      The PEEC is the senior technical committee of the AICPA designated to interpret the AICPA Code of Professional Conduct, make amendments to the Code and enforce the rules of conduct. Ultimately, the PEEC is accountable to the AICPA Council.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      All new or revised ethics standards proposed by the PEEC are issued in an exposure draft for public comment. The comment period is generally 60-90 days and the exposure draft is posted to the AICPA’s website.

    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)

      All standard-setting activities are conducted at meetings open to the public.

    4. other relevant due process activities

      Proposed standards are deliberated and approved at meetings open to the public. All comment letters also are considered at the open meeting. A 2/3 majority of voting members is required to approve a final standard. All final standards are released in the Journal of Accountancy (AICPA periodical) and posted to the AICPA website.


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      9 Day(s)


    Section 6B -- Standard-Setting (PCAOB)


    56. For PCAOB, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      The PCAOB is a private-sector, non-profit corporation, created by the Sarbanes-Oxley Act of 2002. Its standards are applicable to listed entities.

      b. Name of standards

      PCAOB ethics and independence standards. See PCAOB Rule 3500 and 3600T.


    57. How many voting members does the standard-setting body have?
      5


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      From the Sarbanes-Oxley Act of 2002: Board members are appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.

      Two members, and only 2 members, of the Board shall be or have been certified public accountants, provided that, if 1 of those 2 members is the chairperson, he or she may not have been a practicing certified public accountant for at least 5 years prior to his or her appointment to the Board.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      From the Sarbanes-Oxley Act of 2002: The Securities and Exchange Commission, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury


    61. What is the term of appointment for members?
      5 Year(s)


    62. For how many years has the standard-setting body been in existence?
      2 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      101,247,000 represents the total budget inlcuding standard-setting, enforcement activities, and salaries.

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.000



    64. To what entity is the standard-setting body accountable?
      From the Sarbanes-Oxley Act of 2002: The Board shall submit an annual report (including its audited financial statements) to the Securities and Exchange Commission, and the Commission shall transmit a copy of that report to the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Any questions regarding the PCAOB’s due process should be addressed to the PCAOB.

    2. accessibility of meetings (i.e., public or private)

      Any questions regarding the PCAOB’s due process should be addressed to the PCAOB.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Any questions regarding the PCAOB’s due process should be addressed to the PCAOB.

    4. other relevant due process activities

      Any questions regarding the PCAOB’s due process should be addressed to the PCAOB.


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      The system in the US includes education from K-12 (Kindergarten, 6 years elementary, 2 years junior high school, 4 years high school). Collegiate education includes associate degree programs (2 years), bachelors/undergraduate degree programs (4 years) and masters/graduate programs (1-2 years). Doctoral programs as well as other professional degree programs such as law and medicine require several years beginning at the masters degree level. The 12 years from elementary through to high school are compulsory.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      All CPAs are examined, licensed, and regulated under state accountancy laws, and there is such a law in every American jurisdiction. Each of the 54 jurisdictions has a state board of accountancy (state legal entity) that determines the requirements for entry into the profession, grants certificates and licenses to practice, and regulates the practice of accountancy in the state/jurisdiction. The entry level requirements include education, passage of the Uniform CPA Examination and practical experience.

      With respect to question 70, the state boards of accountancy establish the education requirement for certification. The AICPA also has an education requirement of 150-semester hours for membership. (This is not in addition to the education requirement for certification. Individuals certified in a non-150-semester hour state must meet the AICPA education requirement for membership.)


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      The great majority of states (43 currently; another 5 within the next several years) require 5 years of collegiate education (150-semester hours), including a bachelors degree, for CPA certification. The educational preparation includes accounting knowledge and skills, business knowledge and skills and general/liberal arts components.
      Professional examinations
      Practical experience
      The experience requirement varies from zero (in 2 states) to 2 years (in 20 states). The balance of the states require one year of experience. Most states require a component of the experience to be in audit and assurance services.
      Final qualifying examination
      All 54 states require passage of the Uniform CPA Examination. The 14-hour examination includes coverage of auditing and attestation; financial accounting and reporting; regulation, including federal taxation, ethics, professional and legal responsibilities and business law, and business environment and concepts as well as the related skills.
      Other (please describe)
      Some states require an ethics examination in addition the Unifoirm CPA Examination.

      The state boards of accountancy establish the education requirement for certification. The AICPA also has an education requirement of 150-semester hours for membership. (This is not in addition to the education requirement for certification. Individuals certified in a non-150-semester hour state must meet the AICPA education requirement for membership.)


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      Information may be obtained from the State Board of Accountancy. For contact information, go to http://www.aicpa.org/states/stmap.htm.

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      The boards of accountancy grant certificates and licenses to practice public accountancy to qualified individuals who comply with the requirements of the statute. The boards monitor licensees' practice of public accountancy to insure that the services provided to the public are in accordance with the ethical standards of the accountancy laws and regulations. The boards also insure that licensees have complied with all continuing education requirements necessary to renew their licenses.

      The state boards’ objective is to provide quality service to licensees and the consumers they serve. Most boards administer the national Uniform CPA exam Exam and before granting a license determine the competency by evaluating each candidate's experience. The boards respond to inquiries and provide professional guidance to each inquiry.

    2. How many voting members does the relevant body(ies) have

      Varies from state to state.

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: The boards of accountancy are comprised of volunteer licensees in the statesas well as full time staff.

    4. For how many years has the body been in existence?

      Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      By contacting each State Board of accountancy. For contact information, go to http://www.aicpa.org/states/stmap.htm.

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:
      There are differences as indicated in question 68 (state-level differences).

      With respect to question 74, the education programs are delivered by educational institutions (universities, etc.). The CPA Examination is prepared by the American Institute of CPAs (AICPA), with oversight of the National Association of State Boards of Accountancy (a federation of the state boards) and delivered to candidates through testing centers. Grading of the examination is provided by the AICPA and reported to candidates by the state boards of accountancy.


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain) Please refer to commentary in questoin 73.


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      To become a CPA, a candidate must meet the requirements of the state or jurisdiction in which he or she wishes to practice. These requirements, which vary from stae to state, are established by law and administered by the state boards of accountancy.


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)
      Some states have age, citizenship, and residency requirements. The requirements vary by states. Please refer to http://www.nasba.org/NASBAfiles.nsf/3BC653050D8FA086256C1B00792FF5/$file/CPAPractiReq2002.PDF


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify):


    80. What entity grants the license?
      Licenses are garanted by each of the 54 State Boards of Accountancy


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      Auditors of listed entitites are required to register with the PCAOB.



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government Federal Accounting Standards Advisory Board (FASAB)
      Ministry/department Federal Accounting Standards Advisory Board (FASAB)
      Statutory authority/agency See FASAB for Federal and GASB for State and Local Federal Accounting Standards Advisory Board (FASAB)
      Profit entity owned by government See FASAB for Federal and GASB for State and Local
      State governments Governmental Accounting Standards Board (GASB) for State and Local)
      Local governments Governmental Accounting Standards Board (GASB) for State and Local)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      Refer to government websites.

      b. Are the documents available in English?
      Yes   No


    Section 8B -- Standard-Setting (Federal Accounting Standards Advisory Board (FASAB))


    83. For Federal Accounting Standards Advisory Board (FASAB), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Federal advisory committee- a committee appointed by government

      b. Name of standards

      Statements of Federal Financial Accounting Standards


    84. How many voting members does the standard-setting body have?
      10


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Four federal members are appointed by their agency heads. For non-federal members, various criteria are considered and an appointments panel comprising federal and non-federal members is consulted.


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Appointment of the six non-federal members is made by the government. The Secretary of the Treasury, the Director of the Office of Management and Budget and the Comptroller General make the appointment jointly.


    88. What is the term of appointment for members?
      5 Year(s)


    89. For how many years has the standard-setting body been in existence?
      13 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1,600,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    91. To what entity is the standard-setting body accountable?
      Administratively, the standard-setting body is accountable to its sponsors – the Office of Management and Budget, the Treasury Department and the General Accounting Office. Ultimately, the standard-setting body also is accountable to Congress and the citizenry.


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      A minimum of 90 days is afforded for public comments

    2. accessibility of meetings (i.e., public or private)

      Public meetings are required. Deliberations in private are not permitted under by the Federal Advisory Committee Act.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Majority requried. Dissents are published in final statement.

    4. other relevant due process activities

      Public hearings are held.


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      12 Day(s)


    Section 8B -- Standard-Setting (Governmental Accounting Standards Board (GASB) for State and Local))


    83. For Governmental Accounting Standards Board (GASB) for State and Local), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Private Organization

      b. Name of standards

      Statements of Governmental Accounting Standards, Interpretation, Technical Bulletins, Implementation Guides.

      Please note: Pronouncements of the GASB's predecessor body, the National Council on Governmental Accounting, remain in effect unless superseded by the GASB.


    84. How many voting members does the standard-setting body have?
      7


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members must possess "knowledge of accouting, finance and government, and a concern for public interest in matters of financial accounting and reporting." Collectively, the Baord should represent diverse backgrounds (government, public accounting, academia, financial analyst); however, there is not a set maeu-up of the Board.


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Members are appointed by the Financeial Accounting Foundation(a private-sector foundation.


    88. What is the term of appointment for members?
      5 Year(s)


    89. For how many years has the standard-setting body been in existence?
      20 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      5,500,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    91. To what entity is the standard-setting body accountable?
      It is responsible to the Financial Accounting Foundation Baord of Trustees - 16 members that represent the public interest.


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Each GASB standard or interpretation, is issued in draft form (Exposure Draft) for public comment. When the Board has reached conclusions on the issues, it directs the staff to prepare a proposed Exposure Draft for consideration by the Board. After further discussion and revisions, Board members vote by written ballot to issue the Exposure Draft. A majority vote of the Board (4 members) is required to approve a document for issuance as an Exposure Draft. Alternative views, if any, are explained in the document.

      The Exposure Draft sets forth the proposed standards of financial accounting and reporting, the proposed effective date and method of transition, background information and an explanation of the basis for the Board’s conclusions.

      At the end of the exposure period, which is determined at the discretion of the Board but should never be less than 30 days (generally 90-120 days), all comment letters and position papers are analyzed by the staff. This is a search for new information and persuasive arguments regarding the issues; it is not intended to be simply a “nose count” of how many support or oppose a given point of view. In addition to studying this analysis, Board members review the comment letters to help them in reaching conclusions.


    2. accessibility of meetings (i.e., public or private)

      The core of the Board’s due process is open decision-making meetings and exposure of proposed standards for public comment. All technical decisions are made in meetings (generally held at the GASB’s office) that are open to public observers, although observers do not participate in the discussions. Each public meeting is announced in advance on the GASB’s website. Decisions reached are also summarized in the monthly GASB Report.

    3. approval process for final standards (i.e., majority required to approve final standards)

      After the comments have been analyzed and studied, the Board redeliberates the issues. As in earlier stages of the process, all Board meetings are open to public observation. The Board considers comments received on the Exposure Draft, and often incorporates suggested changes in the final document. If substantial modifications appear to be necessary, the Board may decide to issue a revised Exposure Draft for additional public comment. When the Board is satisfied that all reasonable alternatives have been considered adequately, the staff is directed to prepare a draft of a final document for consideration by the Board. A vote is taken on the final document, again by written ballot.

      Four affirmative votes are required for adoption of a pronouncement.

      Statements of Governmental Accounting Standards

      The final product of most technical projects is a Statement of Governmental Accounting Standards. Like the Exposure Draft, the Statement sets forth the actual standards, the effective date and method of transition, background information, a brief summary of research done on the project and the basis for the Board’s conclusions, including the reasons for rejecting significant alternative solutions. It also identifies members of the Board voting for and against its issuance and includes reasons for any dissents.

      Statements of Concepts

      In addition to Statements of Governmental Accounting Standards, the GASB also issues Statements of Concepts. Those do not establish new standards or require any change in the application of existing accounting principles; instead, they are intended to provide the Board and constituents with a foundation for setting standards and concepts useful as tools for solving problems. The framework defined in the Statements of Concepts helps the Board identify the right questions to ask in structuring technical projects and contributes to a consistent approach over time. Because of their long-range importance, Statements of Concepts are developed under the same extensive due process the GASB follows in developing Statements of Governmental Accounting Standards on major topics.

      Other Documents

      In addition to broad issues of financial accounting and reporting, the Board considers narrower issues related to implementation of existing standards and other problems arising in practice. Depending on their nature, application and implementation problems may be dealt with by the Board in Statements or Interpretations or by the staff with technical bulletins and implementation guides. All of those are subject to discussion at public Board meetings and to exposure for comment (the implementation guide exposure is limited to the advisory group members.


    4. other relevant due process activities

      For major projects, the Board generally goes significantly beyond the core due process described above. Soon after a major project is placed on the Board’s technical agenda, a task force usually is appointed, including preparers, auditors and users of financial information who are knowledgeable about the subject matter. Experts from other disciplines also may be appointed. Care is taken to ensure that various points of view on the issues involved are represented.

      The task force advises the Board and staff on the definition and scope of the project, the the preparation of a discussion document and related material as a basis for public comment. Resource group meetings are open to public observers. Task forces play an important role in the standard-setting process by providing expertise, a diversity of viewpoints and a mechanism for communication with those who may be affected by proposed standards. In addition, field tests are often conducted to obtain information on implementation issues and costs to comply with the proposal.

      After a discussion document or an Exposure Draft is issued for public comment, the Board often holds public hearings. Those hearings provide an opportunity for the Board and staff to ask questions about information and viewpoints offered by constituents who participated in the comment process. Testimony is received in person and by telephone to broaden participation in the process. Public observers are welcome at all public hearings and may also listen by telephone.


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      36 Day(s)



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity Securities Act of 1933, Section 19 (15 U.S.C. 77s) 07/30/2002 United States Securities and Exchange Commission
      Other (please describe) United States Securities and Exchange Commission (SEC) registrant Recognized by the SEC pursuant to Securities Act of 1933, Section 19 (15 U.S.C. 77s) 07/30/2002 Financial Accounting Standards Board (FASB)
      Other (please describe) United States Securities and Exchange Commission (SEC) registrant AICPA Statement on Auditing Standards No. 69 06/1993 AICPA Accounting Standards Executive Committee (AcSEC)
      Other (please describe) Private companies (not SEC registrants), not-for-profit organizations AICPA Statement on Auditing Standards No. 69 06/1993 AICPA Accounting Standards Executive Committee (AcSEC)
      Other (please describe) Private companies (not SEC registrants), not-for-profit organizations AICPA Statement on Auditing Standards No. 69 06/1993 Financial Accounting Standards Board (FASB)

      a. How can IFAC obtain copies of these documents?

      FASB pronouncements can be obtained at
      http://www.fasb.org

      AICPA pronouncements can be obtained at
      http://www.aicpa.org

      SEC pronouncements are available through commercial publishers such as CCH (http://business.cch.com)


      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (United States Securities and Exchange Commission)


    95. For United States Securities and Exchange Commission, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Government Agency

      b. Name of standards

      Accounting Series Releases, Financial Reporting Releases, Staff Accounting Bulletins


    96. How many voting members does the standard-setting body have?
      5


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      SEC: Commissioners are appointed by the President and go through Congressional confirmation.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      SEC: Commissioners are appointed by the President and go through Congressional confirmation.


    100. What is the term of appointment for members?
      5 Year(s)


    101. For how many years has the standard-setting body been in existence?
      70 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Not separated from entire agency budget.

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    103. To what entity is the standard-setting body accountable?
      The SEC is an independent government agency.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards



    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities

      With respect to question 105, there are no separate standard-setting meetings.


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)


    Section 9B -- Standard-Setting (Financial Accounting Standards Board (FASB))


    95. For Financial Accounting Standards Board (FASB), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      FASB - Private organization

      Emerging Issues Task Force (EITF)

      The EITF was formed in 1984 in response to the recommendations of the FASB’s task force on timely financial reporting guidance and an FASB Invitation to Comment on those recommendations. EITF members are drawn primarily from public accounting firms but also include representatives of large companies and users of financial statements.


      b. Name of standards

      Statements of Financial Accounting Standards, Interpretations, Technical Bulletins, EITF Abstracts, FASB Staff Positions, Derivatives Implementation Group Issues

      Note: Pronouncements of the FASB’s predecessor bodies—the AICPA Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB)—remain in effect unless superseded by the FASB. Those pronouncements include: CAP Accounting Research Bulletins, APB Opinions, and APB Interpretations.


    96. How many voting members does the standard-setting body have?
      FASB - 7 members, Emerging Issues Task Force (EITF) - 14 including nonvoting Chair.


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: FASB-employed. EITF: The Chairman is employed; 13 members are volunteers.


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      FASB: The current composition of the Board is three from the public accounting profession, two from the preparer community, one from academe, and one from the user(investment) community. The policy is to maintain that composition as vacancies are filled. The Trustees have the right to change that composition at their discretion, however. The following seven factors are considered in selecting individuals as members of the FASB.

      1. Knowledge of financial accounting and reporting. All candidates for membership on the FASB should have at least a reasonable level of knowledge and technical competence in financial accounting and reporting, regardless of their background. Without such knowledge, a member’s credibility both inside and outside the organization is likely to suffer, and the FASB’s efficiency may be diminished.

      2. High level of intellect applied with integrity and discipline. Ability to absorb complex information, analyze it objectively, and make lucid decisions about it is crucial. This requires rigorous effort, discipline, and intellectual integrity. It implies consistency of approach and avoidance of digression into areas that have been discussed before and rejected or are unrealistic to consider in current circumstances.

      3. Judicial temperament. This quality implies ability to consider impartially the evidence on all the many sides of the issues, to call for additional evidence if that seems necessary, and then to reach a decision within a reasonable period of time.

      4. Ability to work in a collegial atmosphere. The FASB is a collegial body, characterized by group decision making that requires give and take among the decision makers in order to arrive at timely, workable solutions to problems. The objective is to provide guidance for preparers, auditors, and users of financial reports. That objective must take precedence over the personal philosophies of individual members. For it to do so, members must be able and willing to articulate clearly their views on the issues, but at the same time they should be prepared to make reasonable compromises that will lead to improvement of financial accounting standards even though the improvement may not be an ideal solution in the opinion of an individual member. Such a process can work effectively only if individual members are tactful, respectful of one another’s views, and mindful of the need to agree on workable, rather than ideal, solutions to problems.

      5. Communication skills. Board members should be able to communicate effectively in both oral and written form. Oral communication includes discussion in Board meetings, dialogue with fellow Board members and the technical staff, speeches, and other contacts with persons outside the FASB. Written communication includes internal memoranda, speeches, articles, and correspondence with constituents. All of these kinds of communication require thought, tact, and clarity of expression.

      6. Awareness of the financial reporting environment. The FASB deals with technical accounting issues, but its decisions must be made in the context of trends and events in the economic community as whole. A member of the FASB should have a broad understanding of the environment in which the Board operates.

      7. Commitment to the FASB’s mission. The FASB’s statement of its mission as a private-sector, self-regulatory organization has been circulated widely and has met with general approval in the Harris opinion survey. A candidate for membership on the FASB should be committed to the Board’s mission and to the hard work required to fulfill it.


      EITF: Task Force members are drawn from a cross section of the FASB’s constituencies, including auditors, preparers, and users of financial statements. The chief accountant of the Securities and Exchange Commission attends Task Force meetings regularly as an observer with the privilege of the floor. Similar privilege is granted to the chairman of the Accounting Standards Executive Committee (AcSEC) of the AICPA.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      FASB: Members are appointed by the Financial Accounting Foundation (a private-sector foundation).

      Note to questions 100 and 101: FASB members are appointed for a 5 year term, renewable for one additional term (maximum 10 years). FASB has been in existence for 32 years. EITF members are not appointed for specific terms. The EITF has been in existence for 20 years.


    100. What is the term of appointment for members?
      5 Year(s)


    101. For how many years has the standard-setting body been in existence?
      32 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      25,000,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.0000



    103. To what entity is the standard-setting body accountable?
      FASB: The FASB is accountable to the Trustees of the Financial Accounting Foundation (FAF). The FAF’s role is to select members of the Standards Boards, provide funding, and exercise general oversight. The FAF, however, has no authority over the resolution of technical issues by the Standards Boards. The Securities and Exchange Commission has delegated authority to establish standards for SEC registrants to the FASB, but maintains statutory authority to establish those standards.

      EITF: The EITF is accountable to the Financial Accounting Standards Board.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Each FASB standard or interpretation, is issued in draft form (Exposure Draft) for public comment. When the Board has reached conclusions on the issues, it directs the staff to prepare a proposed Exposure Draft for consideration by the Board. After further discussion and revisions, Board members vote by written ballot to issue the Exposure Draft. A majority vote of the Board is required to approve a document for issuance as an Exposure Draft. Alternative views, if any, are explained in the document.

      The Exposure Draft sets forth the proposed standards of financial accounting and reporting, the proposed effective date and method of transition, background information and an explanation of the basis for the Board’s conclusions.

      At the end of the exposure period, which is determined at the discretion of the Board but should never be less than 30 days, all comment letters and position papers are analyzed by the staff. This is a search for new information and persuasive arguments regarding the issues; it is not intended to be simply a “nose count” of how many support or oppose a given point of view. In addition to studying this analysis, Board members review the comment letters to help them in reaching conclusions.

      EITF:

      The Chief Accountant of the Securities and Exchange Commission attends EITF meetings regularly as an observer with the privilege of the floor. The FASB’s Director, Technical Application and Implementation Activities, also serves as Chairman of the EITF.


    2. accessibility of meetings (i.e., public or private)

      The core of the Board’s due process is open decision-making meetings and exposure of proposed standards for public comment. All technical decisions are made in meetings (generally held at the FASB’s office) that are open to public observers, although observers do not participate in the discussions. A live broadcast of such meetings is available on the FASB website. Each meeting broadcast is also archived and available on the FASB website for one week following the meeting. Each public meeting is announced in advance through the FASB Action Alert. Decisions reached are also published in Action Alert.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Further Deliberation of the Board

      After the comments have been analyzed and studied, the Board redeliberates the issues. As in earlier stages of the process, all Board meetings are open to public observation. The Board considers comments received on the Exposure Draft, and often incorporates suggested changes in the final document. If substantial modifications appear to be necessary, the Board may decide to issue a revised Exposure Draft for additional public comment. When the Board is satisfied that all reasonable alternatives have been considered adequately, the staff is directed to prepare a draft of a final document for consideration by the Board. A vote is taken on the final document, again by written ballot.

      Four affirmative votes are required for adoption of a pronouncement.

      Statements of Financial Accounting Standards

      The final product of most technical projects is a Statement of Financial Accounting Standards (SFAS). Like the Exposure Draft, the Statement sets forth the actual standards, the effective date and method of transition, background information, a brief summary of research done on the project and the basis for the Board’s conclusions, including the reasons for rejecting significant alternative solutions. It also identifies members of the Board voting for and against its issuance and includes reasons for any dissents.

      Other Documents

      In addition to broad issues of financial accounting and reporting, the Board considers narrower issues related to implementation of existing standards and other problems arising in practice. Depending on their nature, application and implementation problems may be dealt with by the Board in Statements or Interpretations or by the staff in FASB Staff Positions. All of those are subject to discussion or announcement at public Board meetings and to exposure for comment.

      EITF:
      Composition of the EITF is designed to include persons in a position to be aware of emerging issues before they become widespread and before divergent practices regarding them become entrenched. Therefore, if the group can reach a consensus on an issue, usually that consensus is taken by the FASB as an indication that no Board action is needed. A consensus is defined as an agreement, provided that no more than three of the thirteen voting members object. Consensus positions of the EITF are ratified by the FASB and are considered part of GAAP. If consensus is not possible, it may be an indication that action by the FASB is necessary.

      The EITF meets at least four times a year. Meetings are open to the public and, generally, are attended by substantial numbers of observers; meetings are also broadcast on the FASB’s website. Because interest in the EITF is high, the FASB has separate subscription plans for keeping up-to-date on the issues. Beginning in June 2004, EITF materials are available on the FASB’s website.


    4. other relevant due process activities

      Note to question 105: FASB generally meets weekly (about 48 days a year).


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      48 Day(s)


    Section 9B -- Standard-Setting (AICPA Accounting Standards Executive Committee (AcSEC))


    95. For AICPA Accounting Standards Executive Committee (AcSEC), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Private organization

      b. Name of standards

      Statements of Position, Audit and Accounting Guides, Practice Bulletins


    96. How many voting members does the standard-setting body have?
      14


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      AcSEC: The current composition of AcSEC is eight members from public accounting, four from the preparer community, one user, and one academician. The policy is to maintain approximately that composition as vacancies are filled. Factors in selecting individuals as members of AcSEC include: best person for the job, including expertise in specialized areas, size of firm, and geographical representation.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      AcSEC: Members are appointed by the Chairman of the Board of the AICPA.

      With respect to question 100:
      AcSEC: 1 year, renewable for 2 additional years. If appointed Chairman, an AcSEC member may serve an additional 3 years.


    100. What is the term of appointment for members?
      1 Year(s)


    101. For how many years has the standard-setting body been in existence?
      32 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      1.300.000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.000



    103. To what entity is the standard-setting body accountable?
      AcSEC is the senior technical committee of the AICPA authorized to set accounting standards and to speak for the AICPA on accounting matters without clearance from AICPA Council or the board of directors. As such, AcSEC is ultimately accountable to AICPA Council. AcSEC is also accountable to the FASB in that AcSEC pronouncements must be “cleared” by the FASB in order to be considered authoritative.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      AcSEC's standards setting process for its SOPs and for Audit and Accounting Guides is outlined below:
      • An accounting or reporting issue requiring guidance, typically due to an emerging problem or diversity in practice, is either identified by AcSEC or brought to AcSEC's attention. An appropriate AcSEC task force drafts a prospectus for a project to address the practice problem and presents it to AcSEC’s Planning Subcommittee (PSC) for approval to undertake the project. The prospectus addresses the nature and pervasiveness of the problem, the technical feasibility of developing an operational solution, alternative solutions, and practical consequences that may result from those solutions. In preparing the prospectus the task force looks to address and meet certain clearance criteria used by the FASB, namely, that the project does not amend or conflict with existing GAAP, that it should result in an improvement in practice, that there is need for the project, and that the benefits of the project are expected to exceed its costs. If the project is approved by the PSC, the prospectus is discussed in a public meeting with the FASB. FASB requires that 4 of FASB's 7 members not object to AcSEC undertaking the project as presented in the prospectus before it is added to AcSEC's agenda.
      • The task force develops a proposed Statement of Position and presents it to AcSEC for approval to expose for public comment. AcSEC may discuss the project over the course of several public meetings (all AcSEC meetings are open to the public), may hold informational or educational sessions for its members, and may request that the task force make substantial revisions to the draft. Approval of the proposed SOP for exposure requires at least a two-thirds vote of AcSEC members.
      • At a public FASB meeting, representatives of AcSEC and the task force then discuss the proposed SOP with the FASB. FASB's clearance criteria and voting process for exposure of the proposed SOP are similar to those for the prospectus. FASB may also suggest changes. Once FASB clearance is obtained, an exposure draft is issued by the AICPA.
      • AcSEC and the task force review all comment letters received. The task force may recommend changes in the document based on the comments received, and AcSEC decides which of those changes should be made.


    2. accessibility of meetings (i.e., public or private)

      See 104a above.

    3. approval process for final standards (i.e., majority required to approve final standards)

      • AcSEC, which may discuss the proposed revisions over the course of several meetings, indicates revisions required before approving the document for final issuance. Approval of an SOP requires at least a two-thirds vote of AcSEC members.
      • FASB discusses the revised document with the AcSEC and task force chairs in a public FASB meeting. FASB's clearance criteria and voting process for issuance are similar to those for the prospectus and exposure draft. The FASB may request or require that certain revisions be made in deciding whether to clear the document for issuance.


    4. other relevant due process activities

      • A similar process exists when AcSEC clears documents through the GASB (see Section 8—Public Sector Accounting Standards). A similar but somewhat less extensive process is used for issuing practice bulletins, as practice bulletins do not require public exposure.
      Sometimes the nature of an accounting or reporting issue is such that AcSEC considers it more appropriate that it be considered by the FASB or FASB's Emerging Issues Task Force (EITF). In such cases, AcSEC will refer the issue to FASB or EITF. The AcSEC chair is a member of the EITF's agenda committee and is a non-voting observer at EITF meetings.


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      16 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      The Securities and Exchange Commission (SEC)


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      The Securities Exchange Act of 1934 grants the SEC the authority to regulate the accounting profession, accounting firms, or persons associated with such firms for purposes of enforcement of the securities laws.

      The SEC’s Division of Enforcement investigates possible violations of securities laws, recommends Commission action when appropriate, either in a federal court or before an administrative law judge, and negotiates settlements.

      Section 105 of the Sarbanes-Oxley Act of 2002 grants the PCAOB broad investigative and disciplinary authority over registered public accounting firms and persons associated with such firms.


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      The Sarbanes-Oxley Act states that the PCAOB shall—
      (1) register public accounting firms that prepare audit reports for issuers;
      (2) establish or adopt, or both, by rule, auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports for issuers;
      (3) conduct inspections of registered public accounting firms;
      (4) conduct investigations and disciplinary proceedings concerning, and impose appropriate sanctions where justified upon, registered public accounting firms and associated persons of such firms;
      (5) perform such other duties or functions as the Board (or the Commission, by rule or order) determines are necessary or appropriate to promote high professional standards among, and improve the quality of audit services offered by, registered public accounting firms and associated persons thereof, or otherwise to carry out the Sarbanes Oxley Act, in order to protect investors, or to further the public interest;
      (6) enforce compliance with the Sarbanes Oxley Act, the rules of the Board, professional standards, and the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, by registered public accounting firms and associated persons thereof; and
      (7) set the budget and manage the operations of the Board and the staff of the Board.


    2. accounting and auditing standard-setting

      Accounting Standards:

      The Securities and Exchange Commission (SEC) has statutory authority to establish financial accounting and reporting standards for publicly held companies under the Securities Exchange Act of 1934. Throughout its history, however, the Commission’s policy has been to rely on the private sector for this function to the extent that the private sector demonstrates ability to fulfill the responsibility in the public interest.

      Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports. They are officially recognized as authoritative by the Securities and Exchange Commission (Financial Reporting Release No. 1, Section 101) and the American Institute of Certified Public Accountants (Rule 203, Rules of Professional Conduct, as amended May 1973 and May 1979). Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information.

      Auditing, Quality Control, and Ethics Standards:

      The Sarbanes Oxley Act gives the PCAOB the authority to establish auditing and related attestation standards, quality control standards, and ethics standards to be used by registered public accounting firms in the preparation and issuance of audit reports. The Sarbanes Oxley Act permits the PCAOB, to the extent it determines appropriate, adopt the standards proposed by one or more professional groups of accountants designated or advisory groups convened, and amend or otherwise modify or alter those rules


    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      The SEC’s Division of Corporation Finance oversees corporate disclosure of important information to the investing public. Corporations are required to comply with regulations pertaining to disclosure that must be made when stock is initially sold and then on a continuing and periodic basis. The Division's staff routinely reviews the disclosure documents filed by companies. The staff also provides companies with assistance interpreting the Commission's rules and recommends to the Commission new rules for adoption.



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      NYSE
      NASDAQ Stock Market
      American Stock Exchange
      Nine smaller regional stock exchanges



    Section 10B -- Stock Exchange
    NYSE Details


    110. For NYSE, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      The stock exchanges examine their members for the purpose of evaluating the soundness of their financial condition and the extent of their compliance with stock exchange rules and pertinent securities laws and regulations. This is accomplished by, among other things, a review and analysis of financial statements filed by members. Annual audited reports are also reviewed. The purpose of the review is not to monitor or enforce the conduct of financial reporting, accounting or auditing.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    NASDAQ Stock Market Details


    110. For NASDAQ Stock Market, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      The stock exchanges examine their members for the purpose of evaluating the soundness of their financial condition and the extent of their compliance with stock exchange rules and pertinent securities laws and regulations. This is accomplished by, among other things, a review and analysis of financial statements filed by members. Annual audited reports are also reviewed. The purpose of the review is not to monitor or enforce the conduct of financial reporting, accounting or auditing.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    American Stock Exchange Details


    110. For American Stock Exchange, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      The stock exchanges examine their members for the purpose of evaluating the soundness of their financial condition and the extent of their compliance with stock exchange rules and pertinent securities laws and regulations. This is accomplished by, among other things, a review and analysis of financial statements filed by members. Annual audited reports are also reviewed. The purpose of the review is not to monitor or enforce the conduct of financial reporting, accounting or auditing.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    Nine smaller regional stock exchanges Details


    110. For Nine smaller regional stock exchanges, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Nine smaller regional stock exchanges operate in Boston, Cincinnati, Chicago, Los Angeles, Miami, Philadelphia, Salt Lake City, San Francisco, and Spokane (some are profit and some are not-for-profit).

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.




    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?

      Refer to the PCAOB.

    2. The number of members on the oversight body

      Refer to the PCAOB.

    3. Its powers

      Refer to the PCAOB.

    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations

      Refer to the PCAOB.

    5. The sanctions the oversight body may impose in the event of non-compliance

      Refer to the PCAOB.

    6. How the oversight body is accountable to any public institution or body

      Refer to the PCAOB.


    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      There are four agencies responsible for regulating banks and savings institutions in the U.S. system. The Federal Reserve is responsible for regulation of state member institutions, the Federal Deposit Insurance Corporation is responsible for regulating state non-member(not members of the Federal Reserve System) banks, the Comptroller of the Currency is responsible for regulating national banks and the Office of Thrift Supervision regulates savings institutions. Credit Unions are regulated by the National Credit Union Association. The Federal Deposit Insurance Corporation also regulates the deposit insurance system. The agencies state that regulatory reporting is now to be in accordance with generally accepted accounting principles that are also used for general purpose external financial reporting. In general, this is true although in some cases the regulators limit the alternatives that may exist under generally accepted accounting principles.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      The primary legislation impacting the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions can by found in the Federal Deposit Insurance Act and the Federal Deposit Improvement Act of 1991(FDICIA). These statutes provide for periodic regulatory examinations of these depository institutions. FDICIA requires all banks and thrifts with assets of $500 million or more to have an annual audit of their financial statements including an audit of internal control over financial reporting. The audit must be performed by an independent accountant meeting certain specific qualifications. Institutions less than $500 million are encouraged but not required to have an annual audit.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      Audit reports received by the regulators in compliance with the reporting requirements of FDICIA are reviewed by the primary regulators and in some cases the regulators may ask to examine the work papers. The regulators can either refer problems to the AICPA or the state boards of accountancy or if the deficiencies meet certain criteria they may take enforcement action against the auditor.

    2. accounting and auditing standard-setting

      The regulators agencies provide input during the exposure process to the standard setting bodies for accounting and auditing. In addition, the AICPA has established a Depository Institutions Expert Panel that meets with the representatives of the various agencies on a quarterly basis to discuss accounting, auditing and regulatory issues.

    3. review of financial statements prepared by listed entities

      Under legislative authority, the regulators have the responsibility of reviewing the filings of all listed financial institutions under their authority. The regulatory agencies require these institutions to follow the same SEC guidelines and regulations as other listed entities.

    4. enforcement of accounting, reporting and auditing requirements

      Please see response to 114a.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.


    116. What is the source of Legal authority of the regulatory authority(ies)?


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession



    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed entities



    4. enforcement of accounting, reporting and auditing requirements




    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      Each of the 54 jurisdictins has an insurance regulator. The National Association of Insurance Commissioners (NAIC) is the organization of insurance regulators from the 50 states, the District of Columbia and the four U.S. territories. The NAIC provides a forum for the development of uniform policy when uniformity is appropriate. The NAIC's primary instruments of public policy are model laws, regulations and guidelines. Insurance departments regulate a national business on a state-by-state basis. The states may either adopt the models intact or modify them to meet their specific needs and conditions. Some of the models have been deemed essential for effective solvency regulation. Such models, or laws that are substantially equivalent, are required of those states seeking formal NAIC accreditation.


    119. What is the source of Legal authority of the regulatory authority(ies)?
      The authority of each state insurance regulator is established in state law.


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      The regulatory authorities do not regulate the auditing profession. The NAIC has a model regulation requiring annual audited financial reprots from insurance companies.

    2. accounting and auditing standard-setting

      ACCOUNTING: Statutory accounting refers to the accounting required of insurers reporting to insurance regulatory authorities. Statutory accounting principles and practices are primarily detailed in the NAIC Accounting Practices and Procedures Manual (AP&P Manual), although each insurerâs state of domicile may allow or require an insurer to utilize an alternative accounting principle or practice (known as a permitted or prescribed practice, respectively). Other sources of statutory accounting guidance exist, and these are organized into a hierarchy that is detailed in the Preamble of the AP&P Manual. Statutory Accounting Principles (SAP) objectives differ from Generally Accepted Accounting Principles (GAAP) objectives. Whereas GAAP stresses matching revenue to expenses, SAP stresses measuring the ability of an insurer to pay claims in the future. The maintenance of SAP is accomplished through two working groups that report to the Accounting Practices and Procedures (E) Task Force: the Statutory Accounting Principles Working Group (SAPWG) and the Emerging Accounting Issues Working Group (EAIWG). The SAPWG has the exclusive responsibility for developing and proposing new Statements of Statutory Accounting Principles (SSAPs). The EAIWG responds to questions of application, interpretation and clarification that are generally much narrower in scope than development of a new SSAP. The NAICâs International Accounting Standards Working Group originated in 2000 to monitor international insurance activity, primarily with the International Accounting Standards Board (IASB) and the International Association of Insurance Supervisors (IAIS) Accounting Subcommittee. It is the goal of the IASWG to stay abreast of current international issues, keep members informed of international activities, and to provide comments to international standard setters representative of the accounting principles of the NAIC. AUDITING The regulatory authorities do not set auditing standards.

    3. review of financial statements prepared by listed listed entities

      Each of the state insurance regulators may review the financial statements prepared for listed entities. The NAIC has a Financial Analysis Unit. The mission of the Financial Analysis Unit is to assist insurance regulators in achieving their objective of identifying, at the earliest possible stage, insurance companies that may be financially troubled. In pursuit of this mission, the Unit performs financial analysis of insurance companies under the direction of the Financial Analysis Working Group (FAWG). The FAWG was formed by the Examination Oversight (E) Task Force to identify insurance companies of national significance (NATSIG), which are, or may be, financially troubled, and to determine whether appropriate regulatory action is being taken. This peer review process has become a fundamental and essential part of the NAIC's Solvency Agenda. In addition the staff maintains and enhances the functionality of NAIC solvency monitoring tools.

    4. enforcement of accounting, reporting and auditing requirements




    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.


    122. What is the source of Legal authority of each regulatory authority?


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession



    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed listed entities



    4. enforcement of accounting, reporting and auditing requirements




    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.

      AICPA Bylaw Sections 220 and 230 (2.2 Requirements for Admission to Membership
      and 2.3 Requirements for Retention of Membership) indicate:

      With respect to those persons who are engaged in the practice of public accounting as an owner or as an employee who has been licensed as a CPA for more than two years, must either be enrolled in an Institute-approved practice-monitoring program if the services performed by such a firm are within the scope of the AICPA’s practice-monitoring standards and the firm issues reports purporting to be in accordance with AICPA professional standards, or if authorized by Council, are themselves enrolled in such a program.

      There are currently two Institute-approved practice-monitoring programs:

      1) AICPA Peer Review Program
      http://www.aicpa.org/members/div/practmon/index.htm


      2) Center for Public Company Audit Firms Peer Review Program
      http://www.aicpa.org/centerprp/index.htm

      ADDITIONAL QUALITY ASSURANCE INFORMATION:

      The Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting the SEC issuer practices of firms performing audits (or a substantial portion of those audits) of SEC issuers (as defined by the PCAOB). http://www.pcaobus.org/



    125. Under what authority does the organization conduct the program of quality assurance review?
      AICPA Board of Directors is authorized to establish peer review divisions governed by executive committees having senior status with authority to carry out peer review activities.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      One firm peer reviews another firm in both AICPA practice-monitoring programs.



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      AICPA, State Boards of Accountancy, PCAOB, SEC, Certain State and Local Government agencies with jurisdiction over the engagement.


    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: The PEEC is comprised of 20 members. Seventeen members are CPA volunteers, while 3 members are form the public (non PCAs) and compensated by the AICPA. The State Boards will vary. The members of the PCAOB and SEC are employed.


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Members of the PEEC are appointed so that there is representation from public practice (including small, medium, and large firms), business and industry, govt, educators, state regulators and the public. Relevant experience with respect to ethics and independence is sought.

      From the Sarbanes-Oxley Act of 2002: PCAOB members are appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures. Two members, and only 2 members, of the Board shall be or have been CPAs, provided that, if 1 of those 2 members I the chairperson, he or she may not have been a practicing CPA for at least 5 years prior to his or her appointment to the Board.

      With respect to question 133:

      The Director of the AICPA Professional Ethics Division, in consultation with the PEEC Chair, nominates the members of the PEEC. The AICPA Board of Directors approves nominations for members of the PEEC.


      From the Sarbanes-Oxley Act of 2002: Members of the PCAOB are appointed by the Securities and Exchange Commission, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and the Secretary of the Treasury.



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      See response in question 132.


    134. What is the term of appointment for members?
      Year(s)


    135. For how many years has the body been in existence?
      Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      (specify currency)



    137. To what entity is the body accountable?
      The PEEC is the senior technical committee of the AICPA designated to interpret the AICPA Code of Professional Conduct, make amendments to the Code and enforce the rules of conduct. Ultimately, the PEEC is accountable to the AICPA Council.


      From the Sarbanes-Oxley Act of 1001: The PCOAB shall submit an annual report (including its audited financial statements) to the Securities and Exchange Commission, and the Commission shall transmit a copy of that report to the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives.



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      Day(s)



     

     

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