Senate Asks Levitt for Smoking Gun

Arthur Levitt, SEC Chairman, presented his case for new guidelines for auditor independence to the U.S. Senate Banking Committee's securities subcommittee yesterday and was met with a request to present his "smoking gun" proof of why such guidelines are necessary.

Not willing to publicly disclose the names of firms, Levitt requested a private audience with members of the Senate and has agreed to brief lawmakers confidentially on his specific reasons pushing for auditor independence in the form of a limitation of the scope of services that can be performed by members of the auditing profession.

In his prepared testimony, Levitt maintained that only a small number of accounting firms, those that audit SEC clients, would be affected by the guidelines.

All of the Big Five firms have spoken out publicly against the proposed guidelines and many others have joined in the SEC's public hearings to express their views. PricewaterhouseCoopers and Ernst & Young have indicated their willingness to work toward a compromise on the auditor independence guidelines, whereas the other Big Five firms have remained adamantly opposed to the proposed rules.

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