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