AICPA Warns of 'De Facto Government Takeover'

Battle lines drawn in recent weeks promise a lively debate over audit reforms. Democratic Senators plan to introduce proposed legislation described by the American Institute of CPAs (AICPA) as "a de facto government takeover of the accounting profession." The key Senate bill, which is sponsored by Democratic Senator Paul Sarbanes, and an amendment proposed by Republican Senator Mike Enzi were both scheduled for mark-up on May 21, 2002, but the markup was postponed at the last minute until after the Memorial Day recess.

Investor advocate groups generally support the Sarbanes bill, as do members of the Andersen oversight group chaired by Paul Volcker. Others in Mr. Volcker's group include Charles Bowsher (most recently head of the accounting profession’s now-disbanded Public Oversight Board), John Bogle, founder and retired chairman of the Vanguard Group, and C. Michael Cook, former chairman and chief executive of Deloitte & Touche. In a letter from the group to Sen. Sarbanes, Mr. Volcker warned that the four largest accounting firms aside from Arthur Andersen "have reverted to past instinct, joining hands to resist meaningful reform efforts."

On the other side of the battle line, Senator Phil Gramm is reportedly working with the AICPA, Securities Industry Association, Business Roundtable and other influential trade groups. The New York Times reports that Sen. Gramm, whose wife served on Enron's board of directors, is preparing to use parliamentary maneuvers to delay the Senate measure and water it down or have it killed. He asked Sen. Sarbanes to postpone the mark-up session and has sent him a list of more than 140 questions about the legislation that were "raised by a variety of parties."

According to the Times, the AICPA is urging its members to oppose the Sarbanes bill because "it would result in a de facto government takeover of the accounting profession and it would micromanage public companies' relationship with their auditors." (G.O.P. Fights Proposed Rules on Auditors, May 17, 2002)

Sen. Gramm has been working with Sen. Enzi on the more liberal Republican amendment. A draft of Sen. Enzi's amendment is available for download at his Web site. Sen. Sarbanes bill is not yet available.

-Rosemary Schlank

You may like these other stories...

With complex financial issues playing a larger role in litigation, and people increasingly turning to CPA experts to involve themselves in everything from criminal investigations to shareholder disputes to uncovering assets...
And down the stretch they come!No, it’s not the thoroughbreds charging toward the finish line in the Kentucky Derby, but the millions of US taxpayers who have yet to file their individual income tax returns before the...
There is increased optimism about the US economy among business executives, as more are anticipating modest growth in recruitment, staff training, and targeted capital spending in the next year, according to results of a new...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.