SEC accused of pressuring audit board

Complaints are rising that the Securities and Exchange Commission is muscling an accounting oversight board in a tilt toward business interests as the two agencies put together rules for public companies and auditors under a landmark anti-fraud law.

In recent months, the SEC and the independent board that supervises the accounting industry have taken differing approaches toward the key part of the Sarbanes-Oxley law that arose from the 2002 malfeasance scandals at Enron Corp. and elsewhere: the requirement that companies assess the strength of their internal financial controls and fix any problems.

SEC Chairman Christopher Cox, in a letter to the Public Company Accounting Oversight Board last fall, urged the board to revise its rules for outside accountants under the requirement to adapt them to the size of the company whose books are being audited.

Now the SEC staff has advised the accounting board -- which is overseen by the SEC -- to make several key revisions to its proposed rules for auditors in a way that some experts say would weaken them.

Cox and the other four SEC commissioners will hold a public meeting Wednesday to discuss the board’s proposed rules for auditors and the “remaining issues in aligning” the SEC and accounting board proposals.

“This is an effort to make sure that investors never learn about material weaknesses” in companies’ financial controls, said Lynn Turner, a former chief accountant at the SEC.

Colleen Brennan, a spokeswoman for the accounting board, declined to comment Monday.

SEC spokesman John Nester said, “We are committed to fulfilling our congressionally mandated requirement to oversee the PCAOB to protect investors under the Sarbanes-Oxley Act. That’s why we have been working closely together with the PCAOB since last May to improve the implementation of [the internal-controls provision] to increase the reliability of the financial statements that companies file” with the SEC.