Today, the American Institute of Certified Public Accountants (AICPA) announced that it is establishing requirements for mandatory quality control systems for the five largest auditing firms to enhance compliance with existing independence rules. Some guidelines of the new quality control systems will affect all members – currently more than 1,300 – of the SEC Practice Section of the AICPA.
The new state-of-the-art systems will feature:
- Automated investment tracking systems that will maintain auditor independence
- Formal disciplinary systems to sanction personnel who violate rules
- Plain English guidance that will better educate audit and non-audit professionals
- Sophisticated training programs
The AICPA hopes this step toward complying with independence rules will reaffirm the profession’s commitment to enhancing investor confidence in the integrity of the financial reporting system. It isn’t that accounting professionals don’t want to comply with existing rules; it’s that the current requirements are outdated and unreasonable. The new system and guidelines should help.
Initial elements of the mandatory quality control system will be in place by March 2000 with the full system in effect by the end of the year. The AICPA estimates that accounting firms will spend more than $25 million to develop and implement sophisticated new investment tracking systems and other controls.