By a vote of 97 to 0, the Senate approved an amended version of S.2673, the accounting reform bill authored by Senate Banking Committee Chairman Paul Sarbanes.

This bill will create an oversight board that is empowered to set accounting and auditing standards and fine or ban any individual or firm that violates them. It will also bar accounting firms from providing consulting services to the companies they audit and provide a 10-year securities fraud felony for anyone who knowingly defrauds shareholders, along with whistleblower protection for employees of public companies.

The Senate legislation is tougher than the House bill with which it must still be reconciled, tougher than President Bush's plan, and tougher than the proposal made by the Securities and Exchange Commission (SEC). But many Americans say it is still too weak. Nearly two-thirds of those surveyed by NewsWeek think the Senate's corporate-reform legislation is too weak to curb future corporate wrongdoing.

What more needs to be done? Former SEC Chief Accountant Lynn Turner suggests more changes are needed to reform the use of corporate stock option plans, roles of securities analysts, training on business ethics, and independence of corporate boards of directors. Harvard law professor Bernard Wolfman makes a case for the proposition that auditors of public companies should be required to limit their activities entirely to auditing, prohibited from consulting for anyone, whether or not an audit client.

Many of the additional reforms were unaddressed in the Senate bill because it was prepared months ago in response to the Enron collapse. But support is likely to grow due to the publicity given subsequent corporate restatements and tax-enforcement actions against major accounting firms, as well as the growing realization that the "Final Four" have almost oligopolistic control over major public companies.

Remarkably, the reform issues seem to have disarmed the global accounting profession in ways never before seen. In the U.K., the Financial Times reports the issue of mandatory auditor rotation has caused a rift because it is opposed by the Big Four and favored by the middle tier firms, who see it as a way to gain a greater share of audits of large public companies. In the U.S., a spokesperson for the American Institute of CPAs said the profession had not prepared any position papers on the issues and had no immediate comment on the Sarbanes bill.

-Rosemary Schlank