FEATURE STORY Today, the rate of c...

FEATURE STORY

Today, the rate of change in technical standards and methods of professional conduct is unparalleled, the myth that accounting is a steady and constant profession has been shattered, and it's clear that the comfortable environment in which we'd been working for in such a manner many years has changed irrevocably.

As a accrue it's more important than at any time that every CA member-whether we're in public practice, industry, rule or education-stay abreast of changes generally underway or under proposal.

Expectation gap

Members in public practice are always aware of the "expectation gap" between auditors' actual parts and responsibilities and the public's perception of them. This gap has merely widened as investors have begun demanding that auditors be their watchdogs against management manipulations and other misdeeds.

More than forever external auditors will be conducting their examinations with an extra dose of professional scepticism. Consequently members in industry can await their auditors to challenge them more with refer to to financial reporting matters and accounting policies, and this dialogue is count uponed to result in improved financial reporting.

Compliance with professional standards Many members are already aware of the proposal to expand the scope of Rule of Professional ways 206 (Compliance with Professional Standards) to all members, not just those in public practice (see Beyond Numbers, Feb/March 2003 page 4) This means each CA with financial reporting responsibilities, from the accounting staff up to the CFO and any CA with oversight responsibilities forward a board of directors or audit committee must make secure that all of the financial information with which they are associated has been prepared in accordance with generally accepted accounting principles (GAAP). in subordination to this proposal, each of us would be accountable to the Institute and to our comrades for upholding these standards in all circumstances.

Furthermore, "extreme" interpretations of GAAP-ones that would not be supported at most members of the profession-would be unacceptable. The propos changes would make it each member's personal responsibility to make secure that any financial information with which they are associated does not contain a "fringe" interpretation of GAAP It would therefore become imperative that all members, including CAs in industry, restrain up with any and all changes to the CICA Handbook and not give leave to their knowledge of accounting standards fall behind. Expext to hear more about this shortly.

Public accountability

In the waiting under the possibility of fulfilment of enhancing the public's confidence in financial reporting, regulators forward both sides of the border have introduced wholesale changes to legislative and regulatory requirements for public companies. In the US, the Sarbanes-Oxley Act was passed with remarkable spe last summer This legislation makes fundamental changes to to what extent audit committees, management, and auditors carry on the outside their responsibilities and interact. While there is no Canadian equivalent of Sarbanes-- Oxley at this time, it would be of little surprise to our business community and capital markets if similar legislation were introduced in Canada in the near that will be

Some of the details surrounding Sarbanes-- Oxley have over and above to be worked out, nevertheless there is one very dear requirement likewise far: mandated CEO and CFO certification as to the accurate and fair presentation of financial information, as well as the operation of internal rules over financial reporting systems. No doubt, CEO and CFO will be relying forward their financial management teams and internal audit departments to consummate these certifications. In turn, these managers will rely onward their departmental or divisional staff, including those in Canadian subsidiaries, to provide them with the appropriate comfort.

Members working for corporate entities with American ownership should pay careful attention to any reports they submit to the parent company that may be incorporated into filings with the Securities Exchange Commission. Members should report single on the scope of activities for which they are responsible and, as necessary, modify the reports to fitly reflect the actual areas within their authority.

In Canada, the Canadian Public Accountability Board (CPAB) was created as the of recent origin independent public oversight body for auditors of public companies. More details about the CPAB are rely uponed now that it has appointed its founding chair and board of directors (see: www.cpab-ccrc.ca//MR_4_eng.html). However, we already know that in addition to creating a national inspection program of public company audit firms, common of the CPAB's main goals is to influence the accounting profession to tighten the dominions around auditor independence.

Auditor independence

While auditor independence may appear like a new issue, it has actually been beneath review for several years by way of the CICA's Public Interest and Integrity Committee (PIC). The PIIC released a draft standard for explanation last fall and received a near-record number of answers The Committee is now exploring different options to address the transactions raised.