Federal Issues

    Whistleblower Rules under Dodd Frank Act 

    On May 25, 2011, the Securities and Exchange Commission issued its final rules to establish a new whistleblower program as required by Section 922 of the Dodd-Frank Act.  The new rules are linked below.  AICPA is analyzing the final rules and plans to work with policymakers regarding any ongoing profession concerns.

    Dodd-Frank Act Section 922 requires the Securities and Exchange Commission to establish a new whistleblower program that will pay awards, subject to certain limitations and conditions, to whistleblowers who voluntarily provide the SEC with original information about a violation of the securities laws that leads to a successful enforcement of an action brought by the SEC that results in monetary penalties exceeding $1,000,000.  The amount of the award is required to equal 10-30% of the monetary sanction.

    In its proposed rule, the SEC would have allowed whistleblowers to report only to the SEC and bypass a company's internal reporting procedures that may be established by a company, even including the procedures that are required under Section 301 of the Sarbanes-Oxley Act.  The final rule calls for direct reporting to the SEC, but provides additional incentives to whistleblowers who report internally first.

    The AICPA believes that it is good public policy, good corporate governance, and in the best interest of investors to ensure that allegations of financial reporting impropriety get to independent audit committees and auditors in a timely manner.  The AICPA maintains that the SEC should implement the Dodd-Frank provision in a manner that ensures audit committees and auditors obtain information from relevant whistleblower complaints and avoid a rule that would bypass or withhold the timely sharing of complaints with them. 

    Additionally, Dodd-Frank Section 728 requires the Commodities Futures Trading Commission to establish a whistleblower program similar to that required of the SEC.  While Section 922 of Dodd-Frank provides an exemption for auditors from receiving awards related to the SEC registrants, no explicit exemption was included relative to organizations under CFTC jurisdiction.  The AICPA is concerned about the implementation of these provisions regarding CPAs and their staff.

    The CAQ, Chamber of Commerce, and AICPA comment letters strongly urged the SEC and CFTC in final rules to, at a minimum, require concurrent whistleblower reporting to the entity and the respective Commission as a condition for an award.  AICPA asked that the agencies extend the time for entities to report on potential wrongdoing to 180 days to allow more time for investigation of internal whistleblower reports (the SEC adopted a 120-day window).

    Legislative Proposals

    112th Congress

    The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a hearing on the whistleblower provisions on May 11, 2011 at which Robert Kueppers of Deloitte testified on behalf of the profession.  A copy of his testimony is linked below.

    Representative Michael Grimm (R-NY) introduced a bill, the Whistleblower Improvement Act of 2011, H.R. 2483,  to improve the Dodd-Frank whistleblower provisions.  AICPA worked closely with Congressman Grimm to insure that audit committees will receive timely information regarding whistleblower information that reasonably could impact the quality of financial reporting.  The bill was voted out of the Capital Markets Subcommittee of the House Financial Services Committee on December 14, 2011.  The AICPA sent a letter in support of the bill to all Members of the Subcommittee in advance of the markup.

    Resources

    Legislative Letter

    December 12, 2011 AICPA letter to Members of Capital Markets Subcommittee

    Final Rules

    The Securities and Exchange Commission issued its final whistleblower rules on May 25, 2011. The Commission's press release and link to rule may be found here.

    May 11, 2011, Bob Kueppers, Deloitte & Touche, testimony on behalf of AICPA before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises.

    Copy of Dodd-Frank Legislation

    The law and all major Congressional actions leading to passage are available on the Library of Congress's THOMAS website by using the advanced search function and searching for H.R. 4173 by bill number under the 111th Congress.

    Comment Letters

    The Center for Audit Quality’s comment letter on the SEC proposed rule

    Chamber of Commerce comment letter on the SEC proposed rule

    AICPA's comment letter on the CFTC proposed rule

    Chamber of Commerce comment letter on the CFTC proposed rule

    Staff Contacts

    Peter Kravitz
    Director, Congressional and Political Affairs
    pkravitz@aicpa.org
    202.434.9218

    Diana Huntress Deem
    Senior Manager, Congressional and Political Affairs
    ddeem@aicpa.org
    202.434.9276

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    AICPA Letter to SEC on Proposed Regulation Crowdfunding

    Comment Letter AICPA comments on the SEC's proposed new Regulation Crowdfunding under the Securities Act of 1933 and the Securities Exchange Act of 1934 to implement the requirements of Title III of the JOBS Act as published in SEC File No. S7-09-13.
    Published on February 06, 2014

    Jan 2014 - AICPA Statement for the Record regarding Conferences and Travel

    Article AICPA provided a Statement for the Record to the Senate Homeland Security and Government Affairs Committee in  response  to the hearing held on January 14, 2014 entitled, "Examining Conference and Travel Spending Across the Federal Government."
    Published on January 28, 2014

    Cash Basis Letter to Senate Finance Committee from Associations-Jan7-2014

    Legislative Letters Cash Basis Letter to Senate Finance Committee dated Jaunary 7, 2014 from American Council of Engineering Companies, American Dental Association, American Farm Bureau Federation, American Institute of Architects, American Institute of CPAs and S Corporation Association.
    Published on January 22, 2014

    Municipal Advisors

    Issue Brief The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
    Published on January 07, 2014

    XBRL

    Article Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
    Published on December 30, 2013

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

    Article The AICPA believes that the U.S. DOL should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.
    Published on December 30, 2013

    Take Action Legislation Affecting ESOP Appraisers

    Article The AICPA urges FVS section members to seek congressional support of legislation to fix DOL fiduciary proposal on ESOP appraisers S. 273/HR 2041.
    Published on September 18, 2013

    CPAs Count! Make Your Voice Heard on Capitol Hill.

    Overview The AICPA PAC is the profession’s political action committee. This describes frequently asked questions about the AICPA PAC.
    Published on July 30, 2013

    AICPA Letter to House and Senate Cosponsor S273 and HR2041

    Legislative Letters AICPA Letter to House and Senate Cosponsor S273 and HR2041
    Published on July 12, 2013

    AICPA Letter to U.S. House of Representatives Supporting H.R. 1564.

    Legislative Letters The AICPA supported a bill passed on July 8, 2013 by the U.S. House of Representatives which would prevent the PCAOB from imposing mandatory audit firm rotation for public companies.
    Published on July 12, 2013

    May 21, 2013 Letter in Support of H.R. 2061, the Digital Accountability and Transparency Act of 2013

    Comment Letter May 21, 2013 Letter in Support of H.R. 2061, the “Digital Accountability and Transparency Act of 2013”.
    Published on June 27, 2013

    May 22, 2013 Letter in Support of S. 994, the Digital Accountability and Transparency Act of 2013

    Comment Letter May 22, 2013 Letter in Support of S. 994, the “Digital Accountability and Transparency Act of 2013”
    Published on June 27, 2013

    March 12, 2013 Letter in Support of Federal Government Data Transparency

    Comment Letter March 12, 2013 Letter in Support of Federal Government Data Transparency
    Published on June 27, 2013

    AICPA Letter to House Financial Services Committee Supporting H.R. 1564.

    Legislative Letters The AICPA supported a bill approved on June 19, 2013 by the House Financial Services Committee that would prevent the PCAOB from imposing mandatory audit firm rotation for public companies.
    Published on June 19, 2013

    Audits of FHA-Approved Participants and Related HUD Requirements

    Article FHA proposes new rule to strengthen risk management and shift accountability for the underwriting of FHA-insured loans to the mortgage banks. It may no longer require FHA to approve loan correspondents (mortgage brokers) participating in the FHA program and HUD would no longer require FHA to submit audited financial statements or audits
    Published on May 14, 2013

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