SOX Center

Commissioners gave the SEC staff the go-ahead to work with the PCAOB on making the proposed internal-control auditing standard less prescriptive and more aligned with Section 404.

The Securities and Exchange Commission is sending its accounting staff to work with the Public Company Accounting Oversight Board on additional revisions to the auditing standard that has been criticized by public companies and legislators for creating costly audits of internal controls.

At a Wednesday SEC hearing, staff members of the Office of the Chief Accountant asked the commissioners for permission to work with the PCAOB to address several concerns that were raised during the current public comment period on the revised Auditing Standard No. 2 — which both regulators loosely refer to as AS5. Saying the staff will be “fine-tuning” AS5, the commissioners voted unanimously on all the staffers’ requests.

The staff will now work on matching the tone and wording of AS5 with the SEC’s revised guidance for company management on complying with Section 404, the Sarbanes-Oxley Act’s provision for management’s assessment of internal controls over financial reporting. They will also work with the PCAOB to incorporate more principles-based language into AS5, clarify how the new standard is scalable for companies of all sizes, and adopt a less prescriptive approach for how auditors will decide to use the work of others, such as a company’s internal auditors.

CFO.com: SEC Tells Staff to Revise AS5

A FASB staff member and former KPMG partner, Lawrence W. Smith will begin his new job this summer. His appointment is the first since the SEC demanded more say in how FASB candidates are chosen.

Lawrence W. Smith, a 25-year veteran of KPMG, has been appointed to the Financial Accounting Standards Board to replace outgoing member Edward Trott.

He will serve a five-year term beginning July 1. Trott is retiring after seven and a half years with the board on June 30. Smith has been a member of the FASB staff for nearly five years. He is the director of technical application and implementation activities and chairman of the Emerging Issues Task Force.

The Financial Accounting Foundation announced Smith’s appointment on the heels of controversy surrounding FASB’s independence from the Securities and Exchange Commission. As reported by CFO.com, the SEC’s Office of the Chief Accountant recently refused to sign off on FASB’s 2007 budget until FAF, its parent organization, gave the SEC more say in the appointment of FASB members and FAF trustees.

In a March 9 memo to the SEC, the FAF agreed to a new process for the SEC to review FASB and FAF candidates. The memo stipulates that the SEC has the power to nominate and interview candidates. The SEC officially certified the FASB’s budget on March 14, a job it was given under the Sarbanes-Oxley Act when FASB’s funding source was switched from audit firms to fees from publicly-listed companies.

CFO.com: FASB Announces Trott’s Replacement

New chief accountant named for SEC’s division of investment management

Richard F. Sennett has been named chief accountant of the Securities and Exchange Commission’s division of investment management.

He will have primary responsibility for oversight of the financial reporting and accounting practices of registered investment companies.

According to the SEC, he was instrumental in the development and implementation of the division’s Sarbanes-Oxley annual report review process.

AccountancyAge: Sarbox man gets chief accountant role at SEC