House Financial Services Committee Chairman Frank Praises SEC

July 26, 2007

FEI Summary

On July 26, 2007, House Financial Services Committee Chairman Barney Frank (D-Mass.) issued a letter to U.S. Securities and Exchange Commission (SEC) Chairman Christopher Cox praising the work done by the SEC, in conjunction with the Public Company Accounting Oversight Board (PCAOB), in issuing standards for internal control assessments under Sarbanes-Oxley Section 404.

“I want to congratulate you and your fellow commissioners on finalizing the revisions to the Public Company Accounting Oversight Board’s auditing standard for internal controls,” said Frank, referring to the SEC’s approval of PCAOB Auditing Standard No. 5 (AS5) at the SEC’s open meeting on July 25. (A summary of actions taken at the SEC’s July 25 meeting is available here.)

“I am pleased the Commission and the PCAOB were able to work together on this difficult topic to find a way to address concerns of excessive regulatory burdens without compromising the benefits for investors,” he continued.

In closing his letter to the SEC, Frank wrote: “Thank you for your leadership on this issue. I look forward to a successful implementation of AS 5 that benefits business and investors.”

On a separate matter, Frank issued a  press release on July 25, “applauding SEC Chairman Christopher Cox and the SEC staff for their letter on FAS 140." The letter referenced is SEC Chairman Cox's response to Frank on whether FAS140 precludes modification of loan terms when a default is reasonably possible. In brief, the SEC Chairman's response said, it does not preclude a modification of terms under those circumstances. Further details can be found in Financial Executives International's (FEI) Financial Reporting Blog here.

Prepared July 26, 2007 by Edith Orenstein, Director of Technical Policy Analysis, Financial Executives International (FEI). This summary does not represent FEI opinion unless specifically noted above.