SEC Announces Final Plans for Completing Reviews of Auditor Independence Systems and Controls
FOR IMMEDIATE RELEASE
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:
Preparation for these reviews will commence immediately and final reports are expected to be issued no later than Oct. 31, 2002.