• Tacitly approving the rights of auditors to provide a wide range of non-audit services, including tax services. The group says the SEC made it easy for audit firms to get non-audit services approved by suggesting that services can violate independence principles without necessarily impairing independence and by allowing audit committees to pre-approve non-audit services through policies and procedures, rather than requiring specific reviews of each service.

• Watering down the rules that apply to disclosures of audit and non-audit services, partner rotation, partner incentive compensation for selling non-audit services, definitions of prohibited non-audit services, and auditors of small companies and foreign companies.

Charlie Cray, director of Citizen Works' campaign for corporate reform added, "It appears that the accountants and lawyers who stood by as their clients cooked the books are now writing the recipes for the next course of financial fraud and abuse." The group was formed by Ralph Nader to strengthen citizen participation in government decisions.

In contrast, Dennis Nally, U.S. chairman of PricewaterhouseCoopers, welcomed and praised the SEC's auditor independence rules, saying the SEC has provided regulatory clarity over what is expected of accountants, which should help lessen market turmoil and build investor confidence in the credibility of financial statements from public companies. "What the SEC did," he said, "was not cave in to any one group - be it the accounting profession or corporations."

Mr. Nally acknowledged that smaller accounting firms may find it harder to compete for clients now, partly because lead auditors must be changed every five years and smaller firms have less expertise. As a result, large accounting firms have picked up more business, helping their revenue and fee outlook this year. But, the flip side of that trend, explained Mr. Nally, is that "It does put the spotlight on us and increases our responsibility to satisfy public expectations."

Reader , 31 January 2003 @ 19:24 PM  The big 4 should be scrutinized ... The big 4 should be scrutinized under more stringent rules than what is otherwise applied for smaller firms. The reason being that they carry some image, are trusted for audits of major chunk of business in economy. This should make them shoulder more responsibility in terms of audit independence, truth, fair practices and such devine elements humankind always needed to foster. By twisting the smaller audit firms more than the big 4, what objective SEC is fulfilling? just trying to show that they can only safegaurd the fair practices for a small pie of the total sum? Isn't it their defeat? their inability to protect trust of shareholders who have invested in big businesses? big businesses anyway shall get audited by big 4s. This is a serious matter to be thought over and urges to do something better to protect world economy in general.