At the core of a massive plan to scrutinize up to one fourth of the nation's public companies is a continuation of the SEC's role as financial watchdog.

Academics have found that larger audit firms are less likely to compromise their independence than smaller ones when providing non-audit services to their clients.And when the provision of non-audit services - and consequently the fee - is relatively high, these smaller firms find it hard to resist aggressive accounting by their clients.The Lancaster University study into non-audit services, auditor independence and earnings management found that the latter's proximity to analyst's forecasts varies according to the size of the fee for Big Five and non-Big Five firms.Pelham Gore, Peter

The Securities and Exchange Commission has issued a cease and desist order against KPMG, claiming the Big Five accounting firm had failed to apply rules of independence in its audit of Porta Systems, a Long Island company.At the time of the controversial audit, Porta Systems was being run by KPMG Baymark, a company affiliated with KPMG that specialized in corporate turnarounds. A portion of KPMG's fee was to be based on the profits of the company.

The 75,000-member Canadian Institute of Chartered Accountants (CICA) has announced that it has brokered an exclusive arrangement with the 21,000-member Information Systems Audit and Control Association (ISACA) to offer Chartered Accountants an accredited specialist designation as Certified Information Systems Auditors.The new designation, CA·CISA, will allow CA's who have registered with their provincial institutes to be recognized as specialists in this very specialized field.

AccountingWEB ran a story earlier this month regarding the failed Baptist Foundation of Arizona audit by Arthur Andersen.It now has been discovered that the auditor, Jay Ozer, also was involved in a failed audit 10 years ago with Lincoln Savings & Loan, The Arizona Republic reports that it obtained the investigative report from the Attorney General's office that provided details on Ozer.According to the state of Arizona's Attorney Genera

Last June we reported the formation of an agreement between Deloitte & Touche and Intacct Corporation to produce a web-based accounting service that would be offered to accounting firms.The service, which combines the accounting knowledge of Deloitte & Touche and the software engineering skills of Intacct Corporation, is now live, and it will allow accounting professionals who work with small- and medium-sized enterprises the opportunity to use sophisticated auditing techniques on the web.

Executives of troubled MicroStrategy, the Virginia-based software development company, have been hit with what has been billed as the largest penalties ever inflicted by the SEC in a non-insider trading case. Company Chairman, Michael Saylor, and two other executives will pay $350,000 each, and give up a total of $10 million in what the SEC is calling "ill-gotten gains," a result of an extensive investigation by the federal agency.Still to be determined is the role played by the company's accountants, PricewaterhouseCoopers.

Claiming the Big 5 firm failed to uncover improprieties in the audit of HMO SunStar Health Plan, Inc., the Florida Insurance Department has filed suit against KPMG for $47 million.Earlier this year the department seized SunStar, claiming the organization didn't have enough money to pay the claims of its 80,000 policyholders.

The SEC has finished its investigation into the accounting practices that occurred during the reign of Sunbeam's ousted CEO and CFO, and found enough evidence to recommend action.