In a joint statement, the American Institute of CPAs, the Securities Industry Association and the Bond Market Association said they would start anew discussions on auditor due diligence.

I n mid-October, a number of trade groups went public with auditor guidance outlined by the AICPA in a draft white paper, while several Wall Street organizations went to the federal government with their own concerns. The AICPA guidance reportedly recommended that auditors remain silent during "due diligence" meetings with underwriters, before securities are sold to the public.

In the new statement, the AICPA said that its draft white paper on the subject has been scrapped as new discussions -- involving investors, issuers and regulators -- started. In the meantime, the AICPA said it expects professional practices in the area to be dealt with on a firm-by-firm basis.

According to leaked copies of the draft, in answer to the question, "Is it appropriate for an auditor to address questions from the underwriters regarding the auditor's awareness of any instances of fraud or illegal acts?" the group says "no." The paper goes on to say that should be the case, even if the company authorized the auditor to disclose confidential client information and suggested the question be referred to the company's management.The Securities Industry Association represents nearly 600 securities member firms, including investment banks, broker-dealers, and mutual fund companies in both corporate and public finance. The Bond Market Association represents international securities firms and banks that underwrite, trade and sell debt securities and other financial products. Along with the AICPA, the groups said the guiding principle in the latest round of discussions would be the protection of investors and the capital markets.

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