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U.S. Securities and Exchange Commission

Chairman Levitt Issues Statement on the
Report and Recommendations of the Panel
on Audit Effectiveness



Washington, D.C., June 6, 2000 – Securities and Exchange Commission Chairman Arthur Levitt today issued the following statement on the Report and Recommendations of the Panel on Audit Effectiveness:

I thank the Panel on Audit Effectiveness for its important work and the significant recommendations it has issued in its exposure draft. From auditing standards to profession oversight, the Panel has issued thoughtful proposals that in the words of Chairman O'Malley, "will result in more effective audits…."

Implementation of the specific recommendations made by the Panel to improve the audit process through more comprehensive and vigorous audit methodologies and standards will engender greater confidence among investors that they are receiving high-quality audits.

I also commend members of the Panel for their proposals to improve the self-regulatory framework of the profession. The Panel's call for a system of governance unified under a strengthened, independent Public Oversight Board is both necessary and past due. In addition, strengthening the peer review process and increasing outside membership on the Independence Standards Board will more fully serve the public interest.

On the issue of non-audit services and its impact on auditor independence, I appreciate the challenging and lengthy considerations the Panel undertook. The report makes clear the "wide-ranging perspectives" on this difficult issue.

We look forward to working with the Panel, the profession, standard setters and audit committees to act on these recommendations in short order. Through the ongoing work and cooperation of all interested parties, we can ensure that effective, independent audits of financial statements will continue to be at the foundation of financial reporting in this country.

Additional Materials Available on This Topic

Report and Recommendations of the Panel
on Audit Effectiveness