SEC broadens definition of "financial expert"

Responding to an outcry of criticism for the SarbanesOxley Act definition of "financial expert" in its qualifications for at least one audit committee member, the Securities and Exchange Commission has loosened the wording describing "expertise." The "audit committee financial expert" may have "actively

supervised" people "preparing, auditing, analyzing or evaluating financial statements" as opposed to having done so himself or herself. The word "analyzing" has been added to the definition to encompass a much wider group of executives with overall financial acumen. As in the act, if an audit committee cannot claim such expertise on the part of at least one member, it must explain why. The Sarbanes-Oxley Act regulations released last month also deal with the requirement for a written code of ethics for the CEO, CFO, chief accounting officer and other executives to be published in the annual report or made available on the company Web site. The January rules also prohibit executive and director sales of securities of the company during pension fund blackout periods. Conditions for use of non-GAAP financial information were also defined in the January rules for Sarbanes-Oxley. For a copy of the press release, go to the SEC Web site, www.sec.gov/ news/press/2003-6. htm.