Assessing quality of financial reporting

In light of new requirements contained in the 1999 Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees, Recommendation No. 8, and the amendment to SAS no. 61, auditors, audit committee members, and managers are now struggling to define "quality of financial reporting." In April 2000, the AICPA issued Practice Alert no. 2000-02, Quality of Accounting Principles Guidance for Discussions with Audit Committees, to assist auditors in complying with the new requirements of SAS No. 61. In this commentary, a tentative framework is proposed for use in discussions with audit committees and management.