Securities and Exchange Commission American Institute of Certified Public Accountants NEWS RELEASE SEC AND AICPA ANNOUNCE MEMBERS OF NEW INDEPENDENCE STANDARDS BOARD 97-49 For Immediate Release Contacts:SEC--Chris Ullman 202.942.0020 June 16, 1997 AICPA--Lynn Drake 202.434.9214 (Washington, DC) The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA) today jointly announced the eight public and accounting profession members of the new Independence Standards Board (ISB). Created in response to the increasing challenges of addressing auditor independence issues as business and professional relationships have become more complex, the ISB will operate within the AICPA and will be under the oversight of the SEC. It is expected that the ISB, which will be chaired by Chancellor William T. Allen of the Delaware Court of Chancery, will convene for the first time in July. At this organizational meeting, an executive director will be named and the board will begin to set a course of action and time frame for reviewing and updating auditor independence rules. "American investors are fortunate that a group as distinguished as this is looking out for their best interests," said SEC Chairman Arthur Levitt. "The quality of the public and accounting profession members who've graciously agreed to serve on the ISB is commensurate with the importance of the board's mission. Thanks to Chancellor Allen for swiftly getting the ISB up and running," Levitt said. "Creation of the ISB is in the public interest and is consistent with the profession's responsibilities," said Barry Melancon, AICPA President and CEO and newly appointed member of the ISB. "As the accounting profession continues to develop new services and relationships, it faces challenges to its commitment to independence. This initiative to include public participation in preserving auditor independence further affirms this commitment." "The formation of the ISB presents an opportunity to re- examine a vital issue of securities regulation. The task of reconceptualizing the independence requirement for auditors is a large and important one. We are anxious to begin," said William T. Allen. He added, "Success in clarifying which auditor activities are consistent with the integrity of audited financial statements can contribute to the reliability of financial data and promote informed, efficient capital markets." --more-- SEC/AICPA News Release June 16, 1997 Page 2 The ISB is composed of eight members; four represent the public and four represent the accounting profession. Public Members William T. Allen--Chancellor, Delaware Court of Chancery (term expires June 1997); thereafter Director, NYU Center for Law and Business John C. Bogel--Chairman of the Board, The Vanguard Group, Inc. Robert E. Denham--Chairman and CEO, Salomon, Inc. Manuel H. Johnson--Co-Chairman and Senior Partner, Johnson Smick International; former Vice Chairman of the Board of Governors of the Federal Reserve System Accounting Profession Members 1. Stephen G. Butler, Chairman and CEO, KPMG Peat Marwick LLP 2. Philip A. Laskawy, Chairman and CEO, Ernst & Young LLP 3. Barry C. Melancon, President and CEO, American Institute of Certified Public Accountants 4. James J. Schiro, Chairman and Senior Partner, Price Waterhouse LLP --30-- Independence Standards Board Member Biographies Public Members William T. Allen has served as Chancellor of the Delaware Court of Chancery since 1985. Upon completion of his current term of office in June 1997, Chancellor Allen will accept appointment to the faculty of New York University, where he will serve as Professor of Law and Clinical Professor of Business. He will also serve as Director of the newly created New York University Center of Law & Business, a joint venture of the Stern School of Business and the NYU Law School. Chancellor Allen earned his B.S. from New York University and his J.D. from the University of Texas. John C. Bogel is Chairman of the Board of The Vanguard Group, Inc. and Chairman of each of the mutual funds in The Vanguard Group of Investment Companies. Mr. Bogel served as Chairman of the Board of Governors of the Investment Company Institute from 1969 to 1970, and as a member of the Board from 1969 to 1974. He also served as Chairman of the Investment Companies Committee of the National Association of Securities Dealers, Inc. In 1991, he was named by then-Chairman Richard C. Breeden to the Market Oversight and Financial Services Advisory Committee of the U.S. Securities and Exchange Commission. Robert E. Denham has served as Chairman and CEO of Salomon, Inc. since 1992. Prior to joining Salomon, Mr. Denham worked for twenty years at the law firm of Munger, Tolles & Olson, practicing principally in the areas of securities law and corporate acquisitions. Mr. Denham earned his B.A. from the University of Texas and both his M.A. and J.D. from Harvard University. Manuel H. Johnson is Co-Chairman and Senior Partner of Johnson Smick International (JSI), an economic and political consulting firm. Prior to joining JSI in 1990, Dr. Johnson was Vice Chairman of the Board of Governors of the Federal Reserve System, where he served for four and one half years beginning in 1986. Dr. Johnson also served as Assistant Secretary of the Treasury from 1982 to 1986 and as Deputy Assistant Secretary from 1981 to 1982. Dr. Johnson received a B.S. in Economics from Troy State University, and his M.S. and Ph.D. in Economics from Florida State University. Accounting Profession Members 1.Stephen G. Butler has served as Chairman and CEO of KPMG Peat Marwick LLP since October 1996. He was formerly Managing Partner of the New York metropolitan region and the Partner- in-Charge of the firm's financial services practice in New York. Mr. Butler also served as the Managing Partner of KPMG's international headquarters in Amsterdam and as Managing Partner of the firm's Memphis, Tennessee and Jacksonville, Florida offices. He is a member of the New York City Partnership, the Board of Governors of the United Way of Tri-State, and the Board of Trustees of the U.S. Council for International Business. He graduated with a degree in business from the University of Missouri, Columbia. --more-- Independence Standards Board Member Biographies Page 2 2.Philip A. Laskawy is the Chairman and CEO of Ernst & Young LLP. Before his election to the chairmanship, Mr. Laskawy was Vice Chairman and Managing Partner of the firm's New York regional operations. Progressing through the firm's audit ranks, he was admitted to the partnership in 1971 and has since maintained client responsibilities for many multinational clients representing an array of industries. Mr. Laskawy is a graduate of the Wharton School of the University of Pennsylvania with a B.S. in Economics. 3.Barry C. Melancon is President and CEO of the American Institute of Certified Public Accountants. From 1987 to 1995, Mr. Melancon served as Executive Director of the Society of Louisiana CPAs. Prior to that, he was a partner at the firm of Bergeron & Company, CPAs, in Houma, Louisiana. Mr. Melancon earned a master's degree in business administration from Louisiana's Nicholls State University in 1983, where he also taught as an adjunct professor of accounting from 1984 to 1987. 4.James J. Schiro is Chairman and Senior Partner of Price Waterhouse LLP and serves as Deputy Chairman of Price Waterhouse World Firm. Before his election to the chairmanship, he served as Vice Chairman and Managing Partner for the New York metropolitan region and as Managing Partner of the New York office. Mr. Schiro brings to the ISB more than two decades of experience serving multinational corporations in a variety of industries. He is a graduate of St. John's University, a member of the university's Board of Trustees, and a member of the Board of Advisors' Executive Committee for the Colleges of Business Administration. He is also a graduate of the Amos Tuck School Executive Program at Dartmouth College. --30--