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 unusual transactions.
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 market companies.
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 transitions effectively.
I support this proposal, and I thank Martin Baumann, Greg Scates, Brian Degano and Nicholas Grillo for their fine work.