New York (Feb. 14, 2002) -- Launching a pre-emptive strike prior to testifying before Congress, American Institute of CPAs chairman James Castellano outlined a series of reforms to modernize the current business reporting system -- and warned against jumping to any conclusions that could lead to "dismantling" the profession.

Castellano called the events at Enron "deeply disturbing" and acknowledged that its failure had eroded trust in the accounting profession. He is scheduled to testify Thursday before the House Energy and Commerce Committee.

To help shore up that trust, he said the AICPA now embraced some restrictions on consulting work for audit clients, and advocated a series of reforms designed to "provide meaningful information to investors about financial reporting risks." The measures include reforms already proposed by the SEC or legislators, including increasing the frequency of financial reporting, reviewing special purpose entities to make it more difficult for accounting abuses to occur and making it illegal to lie to an auditor.

Questioned on whether Congress might go further than regulators in taking away any power from the AICPA to set standards or provide oversight to non-public companies, Castellano warned against jumping to conclusions.

"Congress can take whatever action it chooses to take," he said. "We need to learn what's happened in Enron before we take drastic measures to restructure an entire profession, perhaps dismantle an entire profession that's served our capital markets for 100 years. I don't believe there has been any indication that auditing standards are deficient. And we believe that standard setting is best set in the private sector, where people who have the most experience are going to participate."

-- Tracey Miller-Segarra

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access