On the eve on the mark-up of the Senate accounting reform bill, the Securities and Exchange Commission (SEC) announced it, too, will take up the issue of oversight of the auditing profession this week.
The SEC has scheduled an open meeting on Thursday, June 20, 2002 to consider the issues. It plans to vote at that time on the release of proposed rules that would create the framework for a new private-sector regulatory scheme. The new scheme would apply to accountants who audit or review financial statements filed with the Commission, and the new private-sector agency would replace the accounting profession’s recently-disbanded Public Oversight Board.
Under the SEC's draft of the proposed rules, the new organization's responsibilities would include:
- Conducting reviews of accounting firms' quality controls.
- Disciplining accountants for unethical or incompetent conduct, or other violations of professional standards.
- Either setting or relying on designated private sector bodies to set auditing, quality control and ethics standards.
The reforms have been in the works for some time now, and SEC Chairman Harvey Pitt has asked reporters to be patient with the Commission in its bid to restore investor confidence. Speaking to the New York Financial Writers' Association last week, Brooklyn-born Chairman Pitt explained, "We are constrained by rules dating back to the days of manual typewriters and carbon paper, while you and the rest of the world are on computers, cell phones and BlackBerrys."
You can listen to a live Webcast of the meeting on the 20th at the SEC’s recently-established open-meeting Web site.