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PwC Executive Highlights World Environment Post Sarbanes-Oxley

The intense scrutiny of the accounting industry during the last few years was the subject of J. Richard Stamm's accountancy lyceum presentation in November. The PricewaterhouseCoopers' national partner-in-charge of tax and the firm's US tax leader, Stamm talked with students about the increased regulation and the future of public accounting.

"I want to talk about the world environment in which we operate today, how we've reacted to that world, and what I see as our long-term future within public accounting," Stamm explained.

The Sarbanes-Oxley Act (SOX) of 2002 has significantly impacted the practice of public accounting. Among the sweeping changes in the legislation was the creation in 2003 of the Public Company Accounting Oversight Board (PCAOB), a private-sector, non-profit corporation that regulates firms that audit public companies. One of the goals of the PCAOB is, according to their website, to "protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports."

Stamm included other government agencies in his presentation. "The IRS wants to see greater transparency in tax shelter reform," he said. "They want people to have to disclose what it is they do."

These changes along with other federal and state legislation have resulted in a very proactive IRS and a very reactive corporate world. As a result, tax professionals have increased their direct involvement with the CEO, CFO, and audit committee of each PwC client.

"Companies have to be far more open about the kind of tax planning they are doing, and far more open about the risks they're taking in the tax area," Stamm said.

PricewaterhouseCoopers tries to build quality into everything it does, and it is working with their employees and clients to educate them on all the changes that have occurred with the SOX legislation. Accounting firms are no longer able to be both an advisor and an auditor to the same company, so PwC is attempting to replace lost revenue from this new regulation. It is focusing on its non-audit clients in order to become a more trusted advisor.

"We see tremendous opportunities with private companies. They aren't subject to the same regulation. We think we have the biggest market there," noted Stamm.

He said PwC is committed to increasing its integrity and continuing to develop a trustworthy image. Its priorities include skill development, tax teaming, career progression, coaching, and building weaknesses into strengths. "I see incredible opportunities on the horizon, and I think we are well-positioned to adjust to a changing marketplace."

About the Speaker

J. Richard Stamm is the US tax leader for PwC and is a member of their US Management Committee and PricewaterhouseCoopers' Global Tax Executive Committee. He has served a wide range of companies from large inbound and outbound multinationals to large domestic companies, as well as family-owned businesses. His management roles have included leading the Philadelphia tax office, leadership of the consumer and industrial products industry practice, responsibility for the industry and geographic aspects of the US tax practice, and most recently responsibility of all of the tax national practices.

A graduate in accounting from Lycoming College, Stamm joined PwC in 1976 and was admitted to the partnership in 1986. He is also CPA.

--Kara McFarland
November 2004