Melancon cites “clear gaps” in the rules.
via the AICPA
The American Institute of Certified Public Accountants is recommending to Congress a series of specific measures to promote transparency and strengthen investor protections in the U.S. financial system by requiring tighter audit requirements, AICPA President and CEO Barry Melancon said in a news release today.
“There are clear gaps in the existing regulation of the financial system,” AICPA President and CEO Barry Melancon said. “As objective experts and trusted advisers, CPAs want to play an active and constructive role in improving the current system and providing policymakers with the benefit of our knowledge and experience.”
To begin this initiative, the AICPA is offering eight recommendations based on an AICPA analysis of proposals currently pending in Congress. Melancon announced the new effort at the spring meeting of the AICPA’s governing Council in Washington, D.C. today. More than 350 CPA leaders from all 50 states are convening in the nation’s capital for three days and will be making these recommendations in personal visits with members of Congress.
The AICPA supports and recommends:
- The continued registration and regulation of broker-dealers by the Securities and Exchange Commission and professional self-regulatory organizations. The AICPA believes that auditors of public broker-dealers, as well as non-public broker-dealers that perform clearing or custodial functions should be subject to registration, inspection and enforcement by the Public Company Accounting Oversight Board. (PCAOB.)
- Regulation and registration of hedge funds by the Securities and Exchange Commission, assuming the term “hedge fund” is more clearly defined and with exemptions for small investment vehicles, such as investment clubs. Any such regulation should be carefully crafted not to impede beneficial, private capital-raising activities.
- A requirement that these newly registered hedge funds obtain annual audits by independent certified public accountants.
- Investment advisers that are currently subject to registration with the SEC should continue to be regulated under the Advisers Act.
- Repeal of the present “private advisor exemption,” a change that would subject hedge fund advisers to SEC regulation.
- The AICPA supports a proposal by SEC Chairman Mary Shapiro to require all investment advisers with custody of client assets to undergo “surprise” examinations to confirm safekeeping of assets.
- Requiring evaluations of controls over custodial functions. 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.
- Adequate funding for the SEC to fulfill its regulatory responsibilities.
