After trade groups went public with auditor guidance outlined by the American Institute of CPAs in a draft white paper, a number of groups on Wall Street have turned to the federal government with their own concerns.

The draft guidance reportedly recommends that auditors remain silent during "due diligence" meetings with underwriters, before securities are sold to the public.

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 suggests the question be referred to the company's management.

In an Oct. 13 letter to the Securities and Exchange Commission, the Bond Market Association and the Securities Industry Association jointly asked the SEC to publicly state that the white paper, "does not correctly describe the relationship of auditing standards to oral due diligence discussions and that the auditors' involvement is not limited by auditing standards." Earlier that same week, representatives from the AICPA meet with members of the Big Four auditing firms and several investment banks.

After the Tuesday meeting, the AICPA said in a statement that, "Further dialogue is necessary, so all parties can continue serving the best interests of investors, while complying with applicable securities laws and professional standards."

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