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The Public Company Accounting Oversight Board (PCAOB) Proposes New Auditor Ethics and Independence Rules
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Press Release: Council Applauds PCAOB
FOR IMMEDIATE RELEASE Dec. 14, 2004 THE COUNCIL OF INSTITUTIONAL INVESTORS APPLAUDS PCAOB RULES ON AUDITOR INDEPENDENCE LINK Washington D.C. -- The Council of Institutional Investors, an association of more than 140 public, corporate and union pension funds with over $3 trillion in investments, commends the Public Company Accounting Oversight Board (PCAOB) for proposing new auditor ethics and independence rules. Although the new proposed rules fall somewhat short of Council policy, we view today's action as a significant step forward to address the greatest causes of concern over auditors' independence. Council policy states that a company's external auditor should not perform any non-audit services for the company, except those required by statute or regulation to be performed by a company's external auditor, such as attest services. Today's rule reinforces the fundamental principle that an audit firm must be independent of its client and makes clear that audit firms cannot be considered independent if they provide a service to their client for a contingent fee or commission. Ensuring that auditors are truly independent of the companies they audit is a key policy of the Council because audited financial statements are the primary source of information available to guide and monitor Council members' investment decisions. Council of Institutional Investors: The Council of Institutional Investors is an organization of large public, labor funds and corporate pension funds which seeks to address investment issues that affect the size or security of plan assets. Its objectives are to encourage member funds, as major shareholders, to take an active role in protecting plan assets and to help members increase return on their investments as part of their fiduciary obligations. Founded in 1985 in response to controversial takeover activities that threatened the financial interests of pension fund beneficiaries, the group began with 20 member funds. Today the Council has over 130 pension fund members whose assets exceed $3 trillion, and more than 125 honorary international participants and educational sustainers. It is recognized as a significant voice for institutional shareholder interests 1730 Rhode Island Avenue, NW, Suite 512, Washington DC 20036 Tel: 202.822.0800 FAX: 202.822.0801 Copyright © 2002 Council of Institutional Investors. All rights reserved. |