On April 9, 2002, the House Committee on Financial Services held its final hearing on proposed legislation for accounting and auditing reforms. Witnesses were asked to compare the merits of two major bills now under consideration, the Oxley bill (H.R. 3763) and the LaFalce bill (H.R. 3818) as a final step before the next drafting session and vote. Much of the testimony focused on the role of the accounting oversight board.
- A key issue is whether or not the new board should have responsibility for setting accounting standards under direct oversight by the Securities and Exchange Commission (SEC). Former SEC Chairman Richard Breeden testified that more direct oversight by the SEC is critical, and he also suggests other fundamental changes in the process for setting standards. Instead of the current approach of asking five to seven board members to interrupt their careers to serve on a board like the Financial Accounting Standards Board, Mr. Breeden suggests accounting standards be set by paid professional staff with a board of directors who serve part-time and have careers elsewhere.
- Another area of controversy is the issue of funding. Mr. Breeden supports a private sector board funded by audit surcharges, while David M. Walker, comptroller general of the U.S., supports a public sector board with funding by the federal government.
In addition to the House Financial Services Committee, another House committee is gearing up to get involved. The Energy and Commerce Committee Chair W. J. (Billy) Tauzin has instructed his subcommittee chairs to develop accounting and auditing reforms. To assist in this effort, Oversight and Investigations Subcommittee Chair James C. Greenwood held the first meeting of a newly formed business advisory group chaired by Kenneth A. Kamen, founder and past president of Princeton Securities Corporation. Members of the advisory group include Conrad L. Druker, CPA, Managing Principal, Druker, Rahl & Fein, and Dr. David F. Larker, professor of accounting at the Wharton School of the University of Pennsylvania.