Thank you for your summary of the proposed standard and
amendments before us today and thank you all for your hard work
drafting these proposals.
This proposal contemplates additional audit procedures intended
to improve the auditor's evaluation of the identification of,
accounting for, and disclosure about related parties and significant
The Board is considering this proposal because related party
transactions and significant unusual transactions have played a
recurring role in financial failures, from those that led to the
Sarbanes-Oxley Act to those recently alleged in certain emerging
Auditors have a unique vantage point from which to identify
improper transactions. We want this proposal and the related
amendments to sharpen auditors' focus and help them be more
effective in their investor protection role.
We have been mindful to build on our existing risk assessment
standards to align those concepts with this proposal. Accordingly,
these changes are intended to make audits more efficient, more
effective and integrated with the overall audit approach.
This proposal should also enhance the auditors' understanding of
the issuers' financial arrangements with its senior officers.
Members of our Standing Advisory Group have noted the importance
of additional guidance to auditors in this high risk area, precisely
to avoid misdirected or fruitless attempts to audit related party
I support this proposal, and I thank Martin Baumann, Greg Scates,
Brian Degano and Nicholas Grillo for their fine work.