U.S. lawmakers reached agreement on accounting reform legislation and sent the bill to President Bush for his signature. The White House said the President will sign the bill into law, marking the start of a new era for accountants and investors.

Shortly after the agreement was announced, the stock markets soared, with the Dow Jones industrial average achieving its largest percentage gain since 1987.

According to MSNBC, the main sticking point in the agreement was the oversight board for the accounting profession. Recent decisions about this and other matters are reflected in provisions that include:

• An accounting oversight board with subpoena power. The board will be independent but ultimately overseen by the Securities and Exchange Commission (SEC). The SEC and the accounting oversight board will coordinate their investigations.
• Preservation of the language in the Sarbanes bill designed to bolster the independence of accountants by restricting the consulting services they can perform for audit clients.
• Oversight provisions that relate to foreign auditors of U.S. firms.
• An increase in the maximum jail time for wire and mail fraud and a new category of crime for securities fraud that will carry a 25-year maximum sentence.
• Elevation of document shredding to a crime worthy of jail time.
• A requirement for public companies to make real-time disclosures, if and when the SEC approves rules covering these disclosures.

Additionally, the conference agreement retains most of the provisions in the Sarbanes bill -- the bill the American Institute of CPAs (AICPA) called a "de facto government takeover" of the accounting profession. Highlights are summarized on AICPA's Web site.

Earlier this week, AICPA Chairman James G. Castellano sent an email to AICPA members, saying in part, "Everyday, your representatives have been on Capitol Hill, carrying the profession's message to lawmakers. . . One thing is certain, however: whatever bill emerges from conference committee could significantly impact not just the largest accounting firms, but anyone actively working for a public company or a firm that audits public companies."

The bill, which was ratified quickly and almost unanimously by both houses of Congress, is widely viewed as a political defeat for the profession. CPAs realized that sweeping changes were inevitable, as the press began reporting that the profession's lobbying coalition, led by AICPA, PricewaterhouseCoopers and others, appeared to have lost its formerly awesome powers. One lawmaker was quoted as saying, "We've gone from giving the accounting industry the benefit of the doubt to second-guessing everything they say."

Download the conference report for the Sarbanes-Oxley Act of 2002.

-Rosemary Schlank