May 21 1997 AICPA-Lynn Drake 202.434.9214

Securities and Exchange Commission American Institute of Certified Public Accountants NEWS RELEASE 97-41 For Immediate Release Contacts: SEC-Chris Ullman 202.942.0020 May 21 1997 AICPA-Lynn Drake 202.434.9214 SEC AND AICPA ANNOUNCE THE CREATION OF A NEW INDEPENDENCE STANDARDS BOARD (Washington, DC) The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA) jointly announced today the creation by the accounting profession of a new private-sector body to establish independence standards for the auditors of public companies. The new organization, to be called the Independence Standards Board (ISB) and created within the AICPA, will include both public members and practicing certified public accountants. Chancellor William Allen of the Delaware Court of Chancery has agreed to serve as the Board's first Chairman upon expiration of his current term on the Court at the end of June. The remaining members of the Board will be announced in the next few weeks. The new Board is being created in response to the increasing challenge of addressing independence issues as auditors have entered into new service areas, auditing firms have merged and restructured their operations, and business and professional relationships have become more complex. In this changing environment, many of the Commission's independence regulations, written years ago, no longer provide obvious guidance. The SEC will look to the new Board to address these issues and develop and maintain a body of independence standards that will preserve and enhance the independence of auditors of public companies. "Independence is the soul of the public accounting profession, and today we take a decisive step to ensure that it remains so," said Arthur Levitt, Chairman of the SEC. "By having the Independence Standards Board take the initiative in preserving auditor independence, we harness the resources and expertise of the private sector to address a difficult challenge without new regulation or legislation. l commend the AICPA for its initiative and for the commitment to professionalism that the creation of the new body demonstrates." "This important and far-reaching proposal will serve investors for decades to come," said Barry Melancon, AICPA President and CEO. "For the profession, it is an extension of our ongoing commitment to protecting and serving the public interest while maintaining the strength of our profession's hallmark -- independence. We applaud Chairman Levitt and his staff for their foresight and leadership." Commissioner Steven Wallman, who has encouraged updating the existing framework for independence rules, expressed support for the new entity, noting "the new board -- with fresh insights and judgments -- undertakes the tremendously important task of evaluating how to revise the current rules to ensure auditor independence and effectiveness and maintain public confidence in the integrity of the auditing process." Commissioner Isaac Hunt, who has been active in addressing auditor independence issues, congratulated the profession for taking this important step to preserve investor confidence in independent audits of public companies. "Our goal is to forge an effective public-private sector partnership that serves and protects the public interest, while placing a minimal burden on government resources." While the Commission retains its authority regarding auditor independence and will oversee the operations of the ISB, both the AICPA and the SEC share the view that this new public-private sector partnership, with an open, active standard-setting body and full opportunity for public participation, will strengthen independence standards and protect and promote investor confidence in the securities markets. # # # Facts about the ISB: The eight-member Board will be comprised equally of public members (from which the ISB chairman will be elected) and practicing certified public accountants. Public members will be prominent individuals of high integrity and reputation, who understand the importance of investor protection, the U.S. capital markets and the accounting profession. The ISB will take the lead in establishing, maintaining and improving auditor independence requirements for SEC registrants. The Commission's existing authority regarding auditor independence remains intact. This includes the Commission's authority to institute such enforcement actions as it deems appropriate. Standard-setting meetings will be open to the public and proposed standards will be exposed for public comment before they are issued. The SEC expects to recognize the ISB as the private sector body responsible for establishing independence standards and interpretations for auditors of public entities and will consider principles, standards, interpretations and practices issued by the ISB as having substantial authoritative support. The Board will be assisted by a nine-member Independence Issues Committee (IIC) that will help with the timely identification and discussion of emerging independence issues within the framework of existing authoritative literature. This committee will be comprised of CPAs drawn from firms that audit SEC registrants. The AICPA will provide the funding for the Board, its executive director position and staff. The ISB will be created within the AICPA. After a five-year period, the Commission and the AICPA will review the operations of the ISB to evaluate whether this new independence framework continues to serve the public interest and protect investors. The AICPA (www.aicpa.org) is the national professional organization of CPAs with more than 331,000 members in public practice, business and industry, government and education. # # #

Securities and Exchange Commission American Institute of Certified Public Accountants NEWS RELEASE 97-41 For Immediate Release Contacts: SEC-Chris Ullman 202.942.0020 May 21 1997 AICPA-Lynn Drake 202.434.9214 SEC AND AICPA ANNOUNCE THE CREATION OF A NEW INDEPENDENCE STANDARDS BOARD (Washington, DC) The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA) jointly announced today the creation by the accounting profession of a new private-sector body to establish independence standards for the auditors of public companies. The new organization, to be called the Independence Standards Board (ISB) and created within the AICPA, will include both public members and practicing certified public accountants. Chancellor William Allen of the Delaware Court of Chancery has agreed to serve as the Board's first Chairman upon expiration of his current term on the Court at the end of June. The remaining members of the Board will be announced in the next few weeks. The new Board is being created in response to the increasing challenge of addressing independence issues as auditors have entered into new service areas, auditing firms have merged and restructured their operations, and business and professional relationships have become more complex. In this changing environment, many of the Commission's independence regulations, written years ago, no longer provide obvious guidance. The SEC will look to the new Board to address these issues and develop and maintain a body of independence standards that will preserve and enhance the independence of auditors of public companies. "Independence is the soul of the public accounting profession, and today we take a decisive step to ensure that it remains so," said Arthur Levitt, Chairman of the SEC. "By having the Independence Standards Board take the initiative in preserving auditor independence, we harness the resources and expertise of the private sector to address a difficult challenge without new regulation or legislation. l commend the AICPA for its initiative and for the commitment to professionalism that the creation of the new body demonstrates." "This important and far-reaching proposal will serve investors for decades to come," said Barry Melancon, AICPA President and CEO. "For the profession, it is an extension of our ongoing commitment to protecting and serving the public interest while maintaining the strength of our profession's hallmark -- independence. We applaud Chairman Levitt and his staff for their foresight and leadership." Commissioner Steven Wallman, who has encouraged updating the existing framework for independence rules, expressed support for the new entity, noting "the new board -- with fresh insights and judgments -- undertakes the tremendously important task of evaluating how to revise the current rules to ensure auditor independence and effectiveness and maintain public confidence in the integrity of the auditing process." Commissioner Isaac Hunt, who has been active in addressing auditor independence issues, congratulated the profession for taking this important step to preserve investor confidence in independent audits of public companies. "Our goal is to forge an effective public-private sector partnership that serves and protects the public interest, while placing a minimal burden on government resources." While the Commission retains its authority regarding auditor independence and will oversee the operations of the ISB, both the AICPA and the SEC share the view that this new public-private sector partnership, with an open, active standard-setting body and full opportunity for public participation, will strengthen independence standards and protect and promote investor confidence in the securities markets. # # # Facts about the ISB: The eight-member Board will be comprised equally of public members (from which the ISB chairman will be elected) and practicing certified public accountants. Public members will be prominent individuals of high integrity and reputation, who understand the importance of investor protection, the U.S. capital markets and the accounting profession. The ISB will take the lead in establishing, maintaining and improving auditor independence requirements for SEC registrants. The Commission's existing authority regarding auditor independence remains intact. This includes the Commission's authority to institute such enforcement actions as it deems appropriate. Standard-setting meetings will be open to the public and proposed standards will be exposed for public comment before they are issued. The SEC expects to recognize the ISB as the private sector body responsible for establishing independence standards and interpretations for auditors of public entities and will consider principles, standards, interpretations and practices issued by the ISB as having substantial authoritative support. The Board will be assisted by a nine-member Independence Issues Committee (IIC) that will help with the timely identification and discussion of emerging independence issues within the framework of existing authoritative literature. This committee will be comprised of CPAs drawn from firms that audit SEC registrants. The AICPA will provide the funding for the Board, its executive director position and staff. The ISB will be created within the AICPA. After a five-year period, the Commission and the AICPA will review the operations of the ISB to evaluate whether this new independence framework continues to serve the public interest and protect investors. The AICPA (www.aicpa.org) is the national professional organization of CPAs with more than 331,000 members in public practice, business and industry, government and education. # # #