PCAOB ADOPTS ETHICS/INDEPENDENCE RULEWashington, D.C. — The Public Company Accounting Oversight Board has voted to adopt a new ethics and independence rule concerning communications with audit committees, as well as an amendment to its existing tax services rule.
The PCAOB adopted Rule 3526, Communication with Audit Committees Concerning Independence, and an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles.
The board adopted Rule 3526 to enhance communication between audit committees and registered firms regarding firm independence. Rule 3526 will require a registered public accounting firm, before accepting an initial engagement pursuant to the standards of the PCAOB, to describe in writing to the audit committee all relationships between the firm or any of its affiliates and the issuer or persons in a financial reporting oversight role at the issuer that may reasonably be thought to bear on the firm’s independence.
Registered firms will also be required to discuss with the audit committee the potential effects of any such relationships on the firm’s independence. Rule 3526 will require firms to make a similar communication annually for continuing engagements. If approved by the Securities and Exchange Commission, Rule 3526 will supersede the board’s interim independence requirement, Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and two related interpretations.
The board also adopted an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles. The amendment excludes from the scope of the rule tax services provided during the portion of the audit period that precedes the beginning of the professional engagement period.
As originally adopted, the rule provided that a registered public accounting firm is not independent of its audit client if it or any of its affiliates provide any tax service to a person in a financial reporting oversight role or an immediate family member of such a person during the audit and professional engagement period. The board determined that providing tax services to such a person during the portion of the audit period preceding the beginning of the professional engagement period does not necessarily impair a firm’s independence.
ACCOUNTING WORKER CONFIDENCE DECLINES
Fort Lauderdale, Fla. — A survey of accounting and finance professionals showed a decreasing level of confidence in the economy and the job market.
The Accounting and Finance Employee Confidence Index declined 6.4 points to 50.5 in the first quarter of 2008. That’s the lowest level since the 2005 inception of the survey, which is commissioned by the Mergis Group, a professional placement division of Spherion Corp., and conducted by Harris Interactive. The survey found that 66 percent of the accounting and finance workers polled believe that the economy is getting weaker. That’s a 16-point increase from the fourth quarter of 2007.
The survey also found that 56 percent of accounting and finance workers believe that there are fewer jobs available, up 15 points from the previous quarter. In addition, the amount of workers likely to look for a new job increased to 35 percent, a seven-point increase from the fourth quarter of 2007.
Despite the pessimistic poll results, Jack Causa, senior vice president of the Mergis Group, noted that his group was continuing to see positive growth in demand for workers with skills in tax, financial reporting, corporate auditing and accounting for derivatives. In addition, the U.S. Department of Labor has projected that job candidates in accounting and finance have the best prospects of any industry in 2008.
