SEC Eyeing Authority to Police Accountants

The Securities and Exchange Commission is considering a plan for a self-policing authority to punish accountants who fail to meet professional standards, possibly by giving that power to an existing organization.

SEC Chairman Harvey Pitt has been under pressure from Congress to improve accounting standards after Enron Corp. filed for the largest Chapter 11 bankruptcy ever last month. Arthur Andersen was Enron’s accountant and is under SEC investigation, along with Enron, for possible accounting and disclosure fraud.

The SEC will open talks soon with the largest U.S. accounting firms on developing tougher self-regulation, a spokesman for Pitt said. Pitt said he expects the firms to agree either to creation of a new self-regulatory organization or modification of existing organizations that would be overseen by the SEC.

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Bloomberg News