FOR IMMEDIATE RELEASE                        2002-40

                              
          SEC ANNOUNCES FINAL PLANS FOR COMPLETING
     REVIEWS OF AUDITOR INDEPENDENCE SYSTEMS AND CONTROLS
                              
                              
     Washington, D.C., March 19, 2002 -- The Securities and
Exchange Commission today announced final plans for
completing reviews of the design, implementation and
operating effectiveness of each of the five largest
independent auditing firm’s systems for assuring compliance
with the independence rules.
                              
     Originally, these reviews were to be performed or
overseen by the Public Oversight Board (POB) and its staff;
however, the POB has announced its intention to terminate
its existence by March 31, 2002.  Subsequent to March 31,
the staff of the POB will continue to carry out its
oversight functions under an agreement with the SEC and the
Executive Committee of the SEC Practice Section of the
American Institute of CPAs.  The staff will be known as the
Transition Oversight Staff (TOS) and be led by its executive
director, Jerry D. Sullivan.
     
     The TOS will assume responsibility for conducting and
reporting on the review of the firms’ independence systems.
The TOS will engage independence experts, including experts
from the firms’ peer reviewers, to perform operating
effectiveness tests pursuant to the TOS work programs. The
TOS will define and supervise the work performed by the
experts.

     To assure the public of the thoroughness of the reviews
and the completeness and fairness of the TOS’s public
report, the SEC has agreed to the appointment of Donald J.
Kirk, former vice chairman of the POB and a former chairman
of the Financial Accounting Standards Board, as an
independent party to oversee and issue a public report. Kirk
will report whether the process followed by the TOS in
conducting the reviews was properly defined and performed
and whether the reviews have been appropriately assessed and
reported by the TOS.

     “I am delighted that Don Kirk has agreed to perform
this role,” said SEC Chairman Harvey L. Pitt. “Don brings
exceptional, in-depth knowledge and expertise to this task
and we look forward to working with him to complete this
important project.”

  The TOS report will include, among other matters:

  ·    A description of the scope and methodology of the 
       work performed;
  ·    An evaluation of whether the firms’ independence
       systems provide reasonable assurance that the firms 
       comply with the independence rules;
  ·    Recommendations for remedying any deficiencies in those
       systems; and
  ·    Recommendations to standard setters based on the “best
       practices” observed during the reviews.

  Preparation for these reviews will commence immediately
and final reports are expected to be issued no later than
Oct. 31, 2002.


Contacts: John Morrissey, Deputy Chief Accountant
          (202) 942-4400
          Robert Burns, Chief Counsel to the Chief Accountant
          (202) 942-4400



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