Letter to the Editor: Peer review programs help keep accounting firms in line

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I am writing to provide additional clarity to your article titled, "Reforms should put fear of God into auditing industry" in the April 8-14 issue of the Journal. In the article, you ask the question, "Who is auditing the auditor?"|ret||ret||tab|

In the same issue is an article entitled, "AICPA, Accountants support reforms to boost audit quality, accountability." As noted in that article, the AICPA (Ameri-can Institute of Certified Public Account-ants) is the industry trade group for more than 350,000 accountants in public and private practice and is championing various changes in improving the quality of financial reporting.|ret||ret||tab|

As a membership requirement of this organization, an accounting firm that is-sues reports on audits, attestation en-gagements, reviews or compilations is required to undergo a peer review of its accounting and auditing practice every three years. |ret||ret||tab|

The AICPA's Peer Review Programs are recognized as the most thorough and complete of any profession in the world. The AICPA Peer Review Program is dedicated to enhancing the quality of ac-counting, auditing and attestation services performed by AICPA members in public practice, while being mindful of the profession's covenant to serve the public interest with integrity and objectivity.|ret||ret||tab|

Approximately 34,000 firms participate in the AICPA Peer Review Pro-grams. The programs are split into two divisions, one for those who perform ser-vices for companies registered with the SEC and one for firms who perform no SEC work. |ret||ret||tab|

Approximately 1,200 firms belong to the SEC division and the remainder are enrolled in the Peer Review Program. While the programs are virtually the same, they do serve different public in-terests.|ret||ret||tab|

In the last 25 years, since the inception of these programs, improvements have been made and documented to the quality of the accounting and auditing practices of member firms. |ret||ret||tab|

These two programs constantly undergo an internal and external review process to look for ways to enhance the programs and to further protect the public's interest.|ret||ret||tab|

As to the Andersen situation, specifically. Andersen has successfully undergone several peer reviews during this period. Remember it is a firm of over 28,000 employees and as a whole that firm has produced quality engagements. Unfortunately, it appears that a handful of employees have colluded to circumvent the quality controls in place at Andersen to satisfy the management of Enron. |ret||ret||tab|

Without a doubt, the guilty individuals should be held accountable and punished for their actions. |ret||ret||tab|

It is now apparent that those controls, not only at Andersen but at all firms, need to be revised to insure this type of failures doesn't occur in the future.|ret||ret||tab|

Andersen has had several high profile problems in the past. And as you have noted in those situations, those Andersen partners involved actually received rather light sentences from the SEC.|ret||ret||tab|

The Enron failure is beyond the ac-counting profession to solve by itself Andersen did not cause the Enron failure, dishonest management caused the failure. |ret||ret||tab|

It appears that Andersen, as well as the many Wall Street analysts, and Arthur Levitt, past chair of the SEC, and his staff aided Enron's management in perpetrating this fraud.|ret||ret||tab|

Our profession has zero tolerance for those who break the rules and indeed the vast majority of our 350,000 men and women have the highest ethical standards. The AICPA's Peer Review Pro-gram will continue to be improved to enhance the quality of work that is produced by its member firms and to serve the public interest with integrity and objectivity.|ret||ret||tab|

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Sincerely,|ret||ret||tab|

Anthony D. Lynn, CPA|ret||ret||tab|

Davis, Lynn & Moots PC|ret||ret||tab|

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