On July 30, 2002, President Bush signed into law H.R. 3763, the Sarbanes-Oxley Act of 2002, thereby formalizing tough new provisions to deter and punish corporate and accounting fraud and corruption. One provision of the Sarbanes-Oxley Act creates a Public Company Accounting Oversight Board to enforce professional standards, ethics, and competence for the accounting profession. Among its responsibilities, the Oversight Board will establish independence standards and rules as may be necessary or appropriate in the public interest or to protect investors. Within the next three months, the board members will be appointed by the Securities and Exchange Commission, in consultation with the Treasury Department and the Federal Reserve Board. It is expected that their work on independence and other accounting fraud issues will begin shortly thereafter. Stay tuned for further information on independence standards in future SRC Insights articles or on the Board of Governors web site.
The views expressed in this article are those of the author and are not necessarily those of this Reserve Bank or the Federal Reserve System.