CPA Firms Testify (Briefly) Before SEC
Stating that CPA firms already enjoy a high level of independence standards and professional ethics, such standards and ethics being applicable to consultants as well as accountants within the firm, Bob Garland, partner in charge of the Deloitte & Touche  U.S. audit practice made the point that audits of clients hiring outside consultants to perform tasks now addressed by the CPA firms would result in additional costs. "It would be difficult to assess if the outsider were applying the same level of professional ethics and independence standards that we apply."
Joe Berardino, Arthur Andersen's  Managing Partner for Assurance and Business Advisory Services for North America, added that the SEC proposal represents an "unprecendented assertion of regulatory oversight over firms and the profession," and suggested the regulatory role is properly reserved for Congress.
The three firms represented today are in agreement that the underlying premise of the SEC proposal is that investors may be harmed when accounting firms perform non-audit services to their audit clients. Berardino cited one reason, "perhaps more than any other, that our Firm so passionately and so staunchly opposes the scope of practice proposal. Decades of experience tell us that the more you know, the better the audit."
Berardino also pointed out that companies should have the freedom to choose the service provider they want to use. He predicts that, should these rules be put into play, publicly held companies already using accounting firms to provide non-traditional services will incur tremendous costs as they search for and choose new vendors for services. "Surely there will be instances where several of the most knowledgeable providers will be eliminated because one is providing external audit services, another might have installed the systems, and a third may have advised on transactions around the world." The implication was that the publicly held companies would suffer because they cannot avail themselves of the consulting available at the accounting firm.
The SEC  has taken the position that, "An accountant is not independent when the accountant has a mutual or conflicting interest with the audit client, audits his or her own work, functions as management or an employee of the audit client, or acts as an advocate for the audit client. These principles are consistent with the ethic and tradition of auditor independence." As the SEC strives to ensure that a sense of independence prevails in today's accounting climate, the CPA firms, it appears, are going to continue to squirm.
For complete coverage of the SEC hearings, click here .