June 21, 2004

SEC Approves PCAOB's Internal Controls Standard

Late last week, the SEC issued a release that approved PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.

In a related press release, the SEC said that guidance would be forthcoming from both the SEC and PCAOB staffs. The new Auditing Standard is effective for audits of fiscal years ending on or after Nov. 15, 2004 for accelerated filers - or July 15, 2005 for other companies.

SEC Chief Accountant Blunt on Contingency Fees

Last week, SEC Chief Accountant Donald Nicolaisen held a private meeting with the 7 largest auditors to reinforce the SEC’s position that accepting contingency fees for doing tax work for the companies they audit is not allowed - and he requested that the firms disclose any arrangements that may violate the rules to the client's audit committee.

Bloomberg also reported that Nicolaisen even told the firms they may face SEC enforcement investigations if they accept contingency fees from companies they also audit.

Governance for the Family-Owned Business

Family-owned businesses pose unique governance issues, as reflected in this interview with Jack Moore on Governance in a Family Business.