im of accountants federal registration of accounting firms and cere presented by John Biegler of Price Waterhouse e represents one possible solution to providing assurance that proper quality control is main commends Price Waterhouse for its constructive ress the problems of the profession, and the proposal seration. Other alternatives should also be exple, another approach would be the development org organization subject to Commission oversight fer such a system, the self-regulatory body could sely for establishing standards of auditor conduct, sin approval or revision. Such an organization we cral disciplinary authority to insure that its standards sao subject to Commission (and ultimately judicial) review. e self-regulatory mechanism would be borne by the JISKA would be necessary to implement a self-regulatory mis nature, and considerable further study would first be belly, the combination of a self-regulatory body and vers might provide the public with increased assurance e conducted in accordance with professional standards uy the inadequacies in present disciplinary processes. td. ore difficulty with the self-regulatory organization approach is the discipline and regulation of the larger, more influential members of the body. To be effective, any self-regulatory organization would require the authority and resolve to meet this problem. Conclusion I have outlined this morning steps which the Commission and the profession can take, within the existing structure of the profession, to meet the new responsibilities with which accountants are faced. As I have indicated, the primary areas in which action is needed are those of independence and quality control. In As I mentioned earlier, the Commission believes that the profession should be afforded a period of time to respond to these challenges. general, private resolution of the complex issues inherent in the regulation and discipline of accountants would best be accomplished by the profession itself, subject to the Commission's disciplinary and standard-setting powers under existing law. I do not mean to suggest that effective private solutions to the problems facing accountants would be easy to formulate or implement. The profession, including the major national firms, has consistently been slow to recognize its problems and unable to reach agreement on approaches to those problems. Thus, their ability to work together toward a solution is open to question. The Commission intends to take several initiatives during the coming months which, it believes, will respond to the challenges outlined by this Subcommittee and other commentators. These initiatives the Financial Accounting Foundation ancial Accounting Standards Board to the ons of the Structure Committee of the Accounting Foundation. ISSION's current priorities for resolution tified problem areas. B's work product for the past twelve months. escription of the actions which the Commission is taken in the accounting standards setting area. The profession's response to the recommendations (2) The Commission's response to the recommendations contained in the final conclusions of the Commission on Auditors' Responsibilities. (3) An assessment of the organization and work product of the profession's standard setting body. REGULATION AND OVERSIGHT (1) A review of the steps which the accounting profession as a whole has taken to provide assurances of quality control. (2) A review of the extent to which accounting firms have acted to implement quality control procedures. (3) The Commission's views on whether a legislative initiative is needed to provide assurance that accounting firms are meeting their public responsibilities. The Commission shares with the Subcommittee the goal of fc strong private accounting profession capable of providing the independent assurance and verification of the financial stewation and financial companies. We intend to work actively with both the profess Congress in that effort. I would be pleased to answer any questions the members Subcommittee may have. 19 alicer fic companies. in the early pressly considered ly can be drev See and, and |