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Federal bank and thrift regulators issue revised guidance, Interagency Policy Statement on the Internal Audit Function and Its Outsourcing, prohibiting both public companies and depository institutions with $500 million or more in assets from outsourcing internal audit functions to their external auditors. The new requirements (www.fdic.gov/news/news/press/2003/pr2403.html), issued by the Federal Deposit Insurance Corp., the Federal Reserve Board, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, reflect auditor independence provisions of the Sarbanes-Oxley Act of 2002. The statement also encourages compliance by nonpublic institutions not subject to federal audit and reporting requirements.

The Department of the Treasury says the General Accounting Office (GAO) was unable to express an opinion (www.treas.gov/press/releases/js145.htm) on the federal government’s fiscal year 2002 financial report (www.fms.treas.gov/fr/index.html), released by the Treasury and the Office of Management and Budget at the end of March. According to the GAO (www.fms.treas.gov/fr/02frusg/02gao.pdf), material weaknesses in certain agencies’ accounting, reporting and internal control prevented the federal watchdog—for the sixth consecutive year—from expressing an opinion on the government’s consolidated financial statements.

The International Federation of Accountants’ international auditing and assurance standards board releases International Auditing Practice Statement 1014, Reporting by Auditors on Compliance with International Financial Reporting Standards, and issues two exposure drafts on assurance engagements and audits of small businesses (www.ifac.org). One includes a proposed International Framework for Assurance Engagements and a proposed International Standard on Assurance Engagements 2000, Assurance Engagements on Subject Matters Other Than Historical Financial Information. The other, The Special Considerations in the Audit of Small Entities, Proposed Amendment to International Auditing Practice Statement 1005, presents guidance on distinctive aspects of auditing small organizations’ financial statements. Comments are due June 30.

As part of an ongoing government program prompted by the September 11, 2001, terrorist attacks, the Federal Reserve Board, the Office of the Comptroller of the Currency and the SEC jointly issue a report that identifies operational risks to the nation’s financial system and requires the institutions within it to take certain precautions in response. These measures include identifying clearing and settlement activities on which critical financial markets depend and establishing appropriate objectives for their resumption following a wide-scale disruption. The document, Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System (www.sec.gov/news/studies/34-47638.htm), specifies crucial objectives, including testing to ensure the continuity of essential business functions during an emergency. It also prescribes techniques, such as geographically dispersing resources to minimize damage and facilitate recovery, financial institutions can employ to achieve these goals within required time frames—in some cases by the end of 2004—that vary according to each organization’s role within the system.

The SEC announced in April its unanimous selection of William J. McDonough to be the chairperson of the Public Company Accounting Oversight Board (www.sec.gov/news/press/2003-48.htm). McDonough’s career spans three decades in banking—the last as president of the Federal Reserve Bank of New York.

The PCAOB selected Douglas R. Carmichael, CPA, as its chief auditor and director of professional standards in April (www.pcaobus.org). At the time, Carmichael was director of the Center for Financial Integrity at Baruch College of the City University of New York. Until 1983, as the AICPA’s vice-president of auditing, he directly participated in the development of accounting and auditing standards.

A new AICPA publication, Promoting Your Talent, sheds light on the gap between the number of women who’ve entered the accounting profession over the last 20 years (representing 56% of the total in 2002) and those who’ve become firm partners, shareholders or principals (14%). To address this disparity, the book offers women practical tips on how to capitalize on their skills, project the right image, develop and maintain productive relationships and identify advancement opportunities. It also describes how successful firms manage training, mentoring, flexible work arrangements, leadership development and communication (http://www.aicpa.org/news/index.htm). Nancy Baldiga, the book’s author, is an associate professor of accounting at the College of the Holy Cross in Worcester, Massachusetts.

The AICPA, the AICPA Foundation, the American Red Cross and the National Endowment for Financial Education (NEFE) in April released Disaster Recovery: A Guide to Financial Issues, which contains practical economic advice for catastrophe victims (www.aicpa.org/download/news/2003_0316.pdf). The publication, jointly developed by the AICPA and NEFE, is available free of charge in local Red Cross chapters nationwide.

Jackson M. Day, the SEC’s acting chief accountant, in April announced his intention to return to the private sector as soon as the commission, which is conducting a nationwide search, fills the position permanently (www.sec.gov/news/press/2003-42.htm).