Financial system rules and regs take the spotlight at AICPA 2009 Spring Meeting of Council.
“I firmly believe that any sound solution to the severe economic challenges facing our country will require the insights and contributions of the CPAs in this room… and in every corner of our great nation,†AICPA Chairman Ernie Almonte said at the opening of the meeting.
The Journal of Accountancy reports today:
Mark Peterson, AICPA vice president, governmental and public affairs, said he expects Congress to begin to work through numerous proposals aimed at closing gaps in financial regulation. The various proposals may be pulled together into a larger reform bill, Peterson said. He predicted Congress would then address the idea of a systemic regulator-an entity that could oversee the financial market as a whole.
Regulatory areas the AICPA is focusing on include broker-dealers, hedge funds and investment and hedge fund advisers. For broker-dealers, the AICPA supports continued registration and regulation by the SEC and Self-Regulatory Organizations (SROs). The Institute also believes that auditors of public broker-dealers and non-public broker-dealers that perform either clearing or custodial functions should be subject to registration, inspection and enforcement by the PCAOB.
The AICPA also supports enhanced regulation and registration of hedge funds by the SEC, with the establishment of a “de minimus” threshold that exempts smaller investment vehicles such as investment clubs. Regulation, the Institute is recommending, should be carefully crafted not to impede beneficial, private capital-raising activities. The Institute also supports a requirement that registered hedge funds obtain annual audits by independent public accountants.
For investment advisers/hedge fund advisers, the AICPA believes all investment advisers currently subjected to registration with the SEC should continue to be regulated under the Investment Advisers Act of 1940. The Institute supports the repeal of the current “private adviser exemption,” which would subject hedge fund advisers to SEC regulation. The Institute supports a proposal by SEC Chairman Mary Schapiro to require all investment advisers with custody of client assets to undergo an annual “surprise” third-party examination to confirm the safekeeping of those assets. And the AICPA also favors the performance of procedures to evaluate the effectiveness of the controls the adviser has in place over its custodial functions.
In addition, the AICPA is recommending that in order to provide evidence that a custodian has controls in place to identify each client’s assets, every custodian should be required to retain an independent public accountant to review and report on the effectiveness of the custodian’s internal controls related to its custodial functions, which would be made available to the custodian’s clients.
