The Treasury Department's Advisory Committee on the Auditing Profession has released a draft report outlining recommendations for improving the profession.

The committee held a four-hour public hearing to discuss the draft report and has opened a month-long public comment period on the report. Among many proposed recommendations, the committee suggested implementing market-driven curricula and content for accounting students that continuously evolve to meet the needs of the auditing profession. The accounting certification examinations should be updated on a regular basis to reflect changes in the profession.

In addition, the committee recommended improving the representation and retention of minorities. "As the demographics of the global economy continue to expand ethnic diversity, it is imperative that the profession also reflect these changes," said the draft report.

The committee recommended strengthening audit firms' fraud detection and prevention skills, and clarifying communications with investors regarding auditing firms' fraud detection responsibilities. The committee urged the Public Company Accounting Oversight Board and the Securities and Exchange Commission to clarify in the auditor's report the auditor's role in detecting fraud and that the PCAOB periodically review and update these standards.

In the areas of concentration and competition, the committee recommended reducing the barriers to growth of smaller auditing firms. Public companies would be required to disclose in their annual reports and proxy statements any agreements with third parties that limit auditor choice. The committee recommended monitoring potential sources of catastrophic risk faced by public company auditing firms and creating a mechanism for the preservation and rehabilitation of troubled larger public company auditing firms. In addition, the committee recommended adopting annual shareholder ratification of public company auditors by all public companies.

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