Friday, January 22, 2010

CPAs, ACFE and 404

"A measure by the House Financial Services Committee that would exempt small and midsized companies from Sarbanes-Oxley audit requirements has drawn fire from a number of organizations, including the [AICPA], the Center for Audit Quality and the Association of Certified Fraud Examiners [ACFE]. ... The exemption comes despite a plea from [SEC] Chair Mary Schapiro, who wrote to lawmakers on the committee opposing the carve-out. ... The accounting profession supports the Sarbanes-Oxley Act and we believe that the Section 404(b) internal control provisions should apply to all public companies, not just large ones,' said AICPA president and chief executive Barry Melancon [BM]. ... The exemption provision also raised the ire of ACFE president James D. Ratley, who said that lawmakers need to consider the impact of potential fraud losses on organizations, investors, employees and taxpayers when weighing the cost of anti-fraud controals prescribed by SOX. ... In a report issued last year on fraud statistics, the Austin, Texas-based ACFE found that the implementatiion of anti-fraud controls has a measurable impact on an entity's exposure to fraud. ... Meanwhile, Cindy Forelli, executive director at the CAQ, wrote a letter to the leaders of the congressional committe also criticizing the amendment: 'We believe the reforms under SOX have contributed significantly to restoring investor confidence, and in particular, that Section 404 has played a critical role in promoting high-quality financial reporting, which is vital to the successful operation of our capital markets", Accounting Today, 14 December 2009, link:

BM, shut up. You don't speak for me. I'm a CPA, or didn't you notice? Why does the American Institute of Craven, Pilfering Accountants favor keeping SOX section 404 for small companies? Because the Big 87654-controlled AICPA wants to help the Big 87654 sell SOX 404 internal control audits. I view anything from the ACFE with suspicion ever since Joe Wells founded it in 1988, It too wants more business for its members. The CAQ is a bigger joke than the AICPA, of which it was a part. The CAQ was the AICPA's SEC Practice Section until SOX created the PCAOB which now does inspections, which replaced peer review. The SECPS did nothing to improve Big 87654 practice and the CAQ is just a Big 87654 lobbying organization. Kill SOX! See my 29 August 2009 post:


Anonymous said...


A guild is an association of craftsmen in a particular trade.

The earliest guilds were formed as confraternities of workers.

They were organized in a manner something between a trade union, a cartel and a secret society.

They often depended on grants of letters patent by an authority or monarch to enforce the flow of trade to their self-employed members, and to retain ownership of tools and the supply of materials.

edgar said...

He wrote SEC, him's funny!

Jason said...

I agree.

Bunches of rules keep the AICPA flux with cash.

But I'm for letting knowledgeable folks run their companies as they see fit, and make decisions outside of the restricting influences of new laws.

Get BM.


Anonymous said...

I've thought the same thing for years. I've never, ever understood the value proposition for the law. Nor have I ever understood companies that come out on record as supporting the act (if they actually see value in the law, wouldn't they implement things "their" way instead of indicating they actually like having their arms twisted to comply?).

But later I thought, "my job is 100% dependent on the act, best keep my opinions to myself."

Agree with your post. Always question one's motivation. The military needs wars, lawyers need crimes, and apparently accountants need legislation.

Independent Accountant said...

I add teachers need schools, prison guards need prisoners and economists need theories. Trust no expert.


Imperial Accouting Solutions LLC ( said...

If complying with what are standards and business requirements could help the business to develop from their current status/level into something competitive in the market/business, then I must say retain the system and add amend those that doesn't help Considering the amendment on SOX created a boost of confindence on investors to invest on business, why the need to make a new amendment that would possibly shattered that confidence.

I totally agree with you on your arguement.