Feds poised for crackdown
December 19, 2002
Propose rules that could remove accounting firms from certain audit services
Inman News Features
Federal regulators have responded to the wave of accounting scandals that has rocked the financial sector by proposing new rules that would allow them to bar independent accounting firms from auditing major banking institutions' books.
The proposed rules would establish procedures under which the federal bank and thrift regulatory agencies could remove, suspend or bar an accountant or firm from performing audit and attestation services for insured depository institutions with assets of $500 million or more.
Violations of law or professional standards, negligence or lack of qualifications would be considered good cause to bar an accountant or firm from providing services for these institutions.
Also, under the proposed rules an accountant or accounting firm may not perform audit services as prescribed under section 36 if the accountant or firm has been removed by one of the agencies.
Section 36 requires that these institutions produce an annual report of financial statements and certain management assessments to the Federal Deposit Insurance Corp. (FDIC), Federal banking agency and state bank supervisor, and that an accountant audit these statements to determine whether they comply with generally accepted accounting principles.
The proposed rules are being issued by the Board of Governors of the Federal Reserve System, the FDIC, the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
Copyright: Inman News Service
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