February 1, 2002

The AICPA will not oppose federal legislation restricting the scope of services that accountants may provide their public audit clients, specifically in information technology and internal audit design and implementation. This restriction, however, does not address what we see as the fundamental problem facing the profession and its ability to contribute to U.S. capital markets, namely, an outdated financial reporting model.

The AICPA takes this step in recognition of the crisis of confidence affecting the profession. This change in the Institute's position demonstrates our desire to restore the public's faith in the profession's objectivity and independence, and to build consensus for moving the debate forward to address what we see as the real issues facing the profession and its role in the U.S. economy.

At the same time, however, it must be recognized that CPAs who serve privately owned companies and small businesses have unique needs that are substantially different from what public companies require; these CPAs should not be subjected to the same restrictions. CPAs throughout the U.S. have always provided a range of services including audit, tax, business advisory and information technology, to their privately held clients.

The AICPA believes it is time we begin to move to a reporting model that is suitable to Information Age companies, whose earning assets are often not accurately valued by traditional, manufacturing-based measures. We also need to move from rules-based accounting to principles-based accounting, and to begin to adopt 'real time' financial reporting. Finally, we must raise the stakes when it comes to lying to an auditor.

The debate surrounding the profession's role and revisions to the financial reporting model will inevitably involve many others. But, as we have seen through recent events, it is essential that the debate take place in order to ensure the continued soundness of our markets.