Support for tough accounting and audit reforms is growing, provided the reforms also include stiff sanctions and penalties for top-level corporate management of large public companies.
As the first major step in this direction, on June 28, 2002, the Securities and Exchange Commission (SEC) ordered corporate officers to personally certify that their most recent reports filed with the Commission are both complete and accurate. The SEC also published a list of 945 companies whose chief executive and chief financial officers are now required to comply with the new order.
For the next step, President George Bush is reportedly prepared to recommend new criminal penalties for corporate executives who certify misleading financial statements.
The White House has also said the president might support S.2673, the Senate reform bill, if it is changed to give the SEC more administrative authority. SEC Chairman Harvey Pitt told the Washington Post, "What we want is a much tougher set of rules that is subject to the SEC's oversight and jurisdiction and that's the way we hope ultimately the Senate bill will go."
The SEC's new order applies to companies with revenues in excess of $1.2 billion. Download the new rule, the list of companies to which it applies, and FAQs (frequently asked questions) about the new order.