In the wake of the Enron situation, the Securities and Exchange Commission under the direction of Chairman Harvey L. Pitt is working with members of the accounting industry to design new rules that could help protect investors from unexpected company failures.
Mr. Pitt has scheduled a news conference for 1:30pm EDT today to outline a framework for a professional oversight panel that would include accountants and non-accountants, among other proposals. Today's announcement is likely to be broad in concepts and short on details.
"The contemplation is that the panel would include non-accounting personnel and the SEC would continue to enforce securities laws. But the panel itself could look at ethical and competence issues that aren't necessarily part of securities laws," said Christi Harlan, SEC spokeswoman.
Accounting firms rely on industry self-regulating groups and state licensing boards with guidance from the American Institute of Certified Public Accountants. Although Generally Accepted Accounting Principles are rules designed to provide direction for auditors, the rules allow for a great amount of flexibility in evaluating business performance.
The current system of self-regulation practiced by accounting firms is drawing fire from consumer groups and lawmakers.