Financial Executives Revise Ethics, Support CARTA

In testimony to the House Financial Services Committee on March 20, 2002, Phil Livingston, president and chief executive officer of Financial Executives International (FEI), said FEI lends its support to H.R. 3763, the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002 (CARTA).

Mr. Livingston also suggested the proposed legislation be amended to:

• Require that all senior financial officers of public companies adhere to a code of ethics similar to FEI's newly revised code.
  
• Require that the proposed public accountability board include representatives of professional organizations, such as FEI.
  
• Require that stock exchanges insist that members of audit committees have an understanding of generally accepted accounting principles and other matters that can only have been gained through experience as a financial executive or auditor.
  
• Restrict companies' ability to hire senior personnel from their external auditors.
  
• Establish a committee to study the Financial Accounting Standards Board and issue recommendations for reform in three months.
  
• Require that audit committees disclose the nature and extent of their continuing professional education and require that public companies provide a report of their key corporate governance policies.
  
• Require that shareholders approve all stock option plans.

Download Mr. Livingston's testimony, view FEI's revised Code of Ethics and review FEI's detailed observations and recommendations.

-Rosemary Schlank