Independence Standards Board to cease operations after making major contributions to the resolution of difficult and longstanding auditor independence issues.

The Securities and
Exchange Commission (SEC) and the American Institute of
Certified Public Accountants (AICPA), with the agreement of
members of the Independence Standards Board (ISB), today
announced that the ISB will discontinue its operations
effective July 31, 2001.
     
     The ISB was created in 1997 through an agreement
between the SEC and the AICPA to initiate research, develop
standards, and engage in a public analysis and debate of
auditor independence issues.  During its tenure, the ISB
made significant contributions in many areas, such as
improving communications between audit committees and
auditors regarding auditor independence issues, and
clarifying the impact on an auditor’s independence of
certain financial investments and of professionals leaving
an accounting firm to work for one of the firm’s audit
clients.  Much of the ISB’s work was incorporated into the
SEC’s new auditor independence rules, which were adopted in
November 2000.
     
     With the adoption of the SEC’s new rules and the
strengthening of the AICPA’s Professional Ethics Executive
Committee through the addition of public members, all
parties agreed that the ISB has largely fulfilled its
mission and that there is no longer a need for a group with
the composition and structure of the ISB.
     
     Acting SEC Chairman Laura S. Unger said, “The
Commission’s auditor independence rulemaking would not have
been possible without the foundation laid by the ISB.  Major
parts of our rules can be traced to the ISB’s standards and
public discussions of the issues.  The ISB members and staff
deserve our greatest thanks for doing a difficult job with
skill, statesmanship, and professionalism.  They have
exhibited the highest level of public service.”
     
     Barry Melancon, AICPA President and CEO, also applauded
the ISB’s work.  “The ISB gave us the impetus to improve the
profession’s independence standards. The Board did a lot of
groundwork and helped both the SEC and the profession to
better understand independence issues and their
ramifications.”  Melancon added, “Given the success we’ve
had with the Public Oversight Board’s Panel on Audit
Effectiveness and the Blue Ribbon Panel on the Effectiveness
of Corporate Audit Committees, we believe the best way to
address future issues is for the SEC, the public, and the
profession to work together, supplemented by ad hoc groups
as appropriate.  I’m confident that this process will work.”
     
     ISB Chairman William Allen said, “The members and staff
of the ISB are proud of the work that the ISB was able to
initiate and accomplish.  We worked hard on controversial
issues to address the concerns of public investors, the
accounting profession, and the SEC.  The ISB’s
constituencies often expressed strong and honestly held
divergent views.  By bringing these issues into the open,
soliciting the best possible ideas, and having frank
discussions, we made significant progress.  We are gratified
that our deliberations and findings in large part were
incorporated into the SEC’s rules.”
     
     In addition to Allen and Melancon, the following
individuals served as ISB members: John C. Bogle, Senior
Chairman of The Vanguard Group; Stephen G. Butler, Chairman
and CEO of KPMG LLP; Robert E. Denham, Partner at Munger,
Tolles & Olson LLP; Manuel H. Johnson, Co-Chairman and
Senior Partner of Johnson Smick International, Inc.; Philip
A. Laskawy, Chairman and CEO of Ernst & Young LLP; and James
J. Schiro, CEO of PricewaterhouseCoopers LLP.