Editorial Staff

Publisher/Editor-in-Chief
Colleen Katz

Managing Editor
Elizabeth Uva

Senior Editors
Katharine W. Coveleski
Laura Fischer
Peter D. Fleming
Michael Hayes
Robert Tie
Cynthia Waller Vallario
Stanley Zarowin

Assistant Editors
Sarah Cobb,Vincent Nolan

Contributing Editors
Anita Dennis, Nicholas J. Fiore,
Lesli S. Laffie, Barbara J. Shildneck

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Peter M. Tuohy 

Art Director
Jeryl A. Costello

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Gene Cioffi

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Publishing Technology
Robert DiCorcia

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D. Hillel Lofaso

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Valrie Mason, Ingrid Medina

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Patricia L. Arrington

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Thomas R. Greve

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Karin DeMarco

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Gwenn M. Paness
Joseph Torres 

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John Weinberg

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Highlights

SEC PROMISES ACCOUNTING REFORM BY YEAREND

In late May, at the Investment Company Institute annual meeting, SEC Chairman Harvey L. Pitt said the commission intends to implement regulatory reform of the accounting profession before the end of the year. Pitt first outlined his plan in January to restore investor confidence in the profession after the fall of Enron.

The SEC proposal calls for establishing a “public accountability board” that would replace the Public Oversight Board. The new body, while private-sector in nature, would have a majority of public members and two objectives.

First, it would improve the administration of professional discipline by dividing responsibility: The SEC would have jurisdiction over violations of law; the new board would adjudicate violations of “ethical and/or competence standards” for auditors of public companies.

Second, the new body would establish a permanent quality control staff, composed of individuals unaffiliated with the profession, to replace the current peer-review process for public-company auditors.

AICPA President and CEO Barry C. Melancon said: “We have agreed to an unprecedented change—in the over-100-year history of our profession—to support a separate body that has significant public participation and that will be involved in the discipline and the quality control aspect of firms that audit public companies. Based on the bill passed by the House of Representatives and on what the SEC has articulated as its plan, we believe we can support that proposal.”

NEW FASB CHIEF TO FOSTER MEASURED CHANGE

Robert H. Herz, a CPA and fellow of the Institute of Chartered Accountants, became the fifth chairman in FASB’s 29-year history, succeeding Edmund L. Jenkins, on July 1. A PricewaterhouseCoopers senior partner with nearly three decades’ experience, Herz began his five-year term as the marketplace and the profession looked to the board for timely guidance on a growing number of complex accounting issues. “The financial reporting system needs direction and the capital markets expect it,” he said.

To that end FASB recently took steps to expedite issuance of much-needed accounting standards (see News Digest). Herz said he will follow that course by “working to improve the speed and effectiveness of [FASB’s] activities without sacrificing due process.”

Although assuming the chairmanship meant Herz had to resign from the International Accounting Standards Board (IASB) after serving as a part-time member since January 2001, he expects to maintain close ties to the global organization in order to promote FASB’s active involvement with the IASB and other, national standards setters in support of international “convergence” of accounting standards.

In one sign of that cooperation, Herz said FASB will explore moving toward a “principles-based” approach used by the IASB and many countries around the world. Critics say that method—which develops guidance and rules based on fundamental principles, but doesn’t seek to develop rules for every possible situation—fails to provide the precise guidance reporting entities need. Supporters, however, point to the increasing frequency with which U.S. companies employ accounting techniques that observe the letter of the United States’ narrower “rules-based” standards but ignore their spirit by misreporting information essential to a clear, accurate and complete understanding of companies’ financial results and to the proper functioning of the capital markets.

Editorial Advisers

Kenneth D. Askelson, James Bean, Robert C. Beheler, Phyllis Bernstein, John C. Boma, Jacob R. Brandzel, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Susan M. Comeau, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Penny A. Flugger, Barton C. Francis, Robert J. Freeman, John S. Gibbons, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, James E. Hunton, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, William F. Laurie, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Benjamin F. Mathews, Patrick Michael McDonough, Anita Meola, Debra Mitchell, Roger H. Molvar, Brenda Morris, Bea L. Nahon, Lyne P. Noella, Edward T. Odmark, Stanley Person, Mary P. Ricciardello, Mark L. Richardson, Wesley Riemer, Marshall B. Romney, David Satava, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Keith Tobias, Gary R. Trugman, Robert Willens, Jon Arthur Wise, Mark A. Yahoudy