In an article this month in the Journal of Accountancy, AICPA President Barry Melancon discusses the possible repercussions throughout the entire accounting profession should the SEC's proposed guidelines to limit the scope of services provided by auditors be adopted.
The AICPA position is that proposed ruling is not in the public interest and sites the following concerns:
The proposed ruling would handicap accounting firms as they try to grapple with issues in the New Economy.
Audit quality will suffer if firms are required to divest themselves of those who provide non-audit services.
By reducing the amount of work an accounting firm may perform, audit fees may have to rise as audit clients share a greater percentage of the overhead of accounting firms.
Accounting firms will have difficulty recruiting top talent if SEC restrictions cause the firms to inhibit innovation and participation in the new economy.
Audit firms will rely more heavily on their audit clients for revenue and may thus feel greater pressure to maintain positive relationships with these clients, potentially impeding independence.
Firms will incur additional administrative costs to comply with new regulations; these costs will be passed on to audit clients.
Some of the proposed regulations are unspecific, which may provide the SEC with unbridled power to assert lack of independence with regard to any non-audit service.
The guidelines promote overregulation without a clear need or direction other than a desire to provide government intervention.
The article also discusses the potential trickle-down effect of the guidelines as they will have the potential of permeating the entire accounting community and other regulatory boards.