- The Washington Times - Wednesday, March 20, 2002

Members of a board that oversees the accounting industry told Congress they voted to disband after the chairman of the Securities and Exchange Commission consulted privately with industry officials on a proposal for change but not with them.
The Public Oversight Board, which will cease to exist on March 31, is urging creation of a new body to regulate the accounting industry that would be private but independent of the industry and not reliant on it for finances. In May 2000, the accounting firms that audit publicly traded companies cut off money for the oversight board's special reviews of the firms requested by the government.
The staff of the oversight board is remaining for a transition period under an agreement announced by the SEC yesterday.
The need to change the system is especially clear after the Enron accounting debacle, oversight board Chairman Charles Bowsher testified yesterday at a hearing of the Senate Banking, Housing and Urban Affairs Committee.
"To protect investors and the public, the old system of voluntary self-regulation for the accounting industry must be replaced," Mr. Bowsher said. "It is time to resist the continuation of the status quo and move ahead with fundamental change."
The new body would be called the Independent Institute of Accountancy, would be created by Congress and would oversee accounting standards, inspections of auditing firms and discipline of accountants. Under Mr. Bowsher's plan, its estimated $100 million annual budget would be paid through fees paid by companies whose stock is traded publicly.
The proposal also calls for the SEC to exercise oversight of the new body and for companies to change their auditors every seven years.
The accounting industry has come under intense scrutiny, and several legislative proposals have been circulated in Congress, since Enron's collapse and descent into the biggest corporate bankruptcy in U.S. history last fall. The plan put forward by Mr. Bowsher, a former U.S. comptroller general and head of Congress' General Accounting Office, could be expected to carry substantial weight among lawmakers.
In January, Mr. Bowsher and the other four members of the Public Oversight Board voted in protest to dissolve after SEC Chairman Harvey Pitt announced his proposal for a new private-sector body to oversee the accounting industry.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide