Pitt’s Oversight Board May Ask for Accountants’ Help
Securities and Exchange Commission Chairman Harvey L. Pitt’s proposed accounting oversight board could get help setting ethical standards from the industry’s chief lobbying group, commission officials said Wednesday.
Robert E. Burns, chief counsel in the SEC’s Office of the Chief Accountant, said the Public Accountability Board that Pitt envisions might initially look to the American Institute of Certified Public Accountants to assist in setting standards for independence, ethics and quality of auditors.
After a start-up period, the board might establish its own standards, Burns said.
“This is going to be an organization set up in the private sector by the private sector,” Burns said in a briefing for reporters about Pitt’s proposal, which is slated for an SEC vote today.
The institute is a lobbying arm for the accounting industry and has been responsible for disciplining auditors.
Pitt surprised critics this week by proposing an industry oversight board with tougher enforcement powers than he envisioned.
On Tuesday, the Senate Banking Committee approved a bill that would create an accounting oversight board with duties and powers that largely mirror Pitt’s proposal.
The SEC plan, which will be put out for public comment after today’s vote, worries critics of the accounting industry who fear that a new board could be heavily influenced--and weakened--by the profession.
Investor confidence in accounting has eroded amid a flurry of scandals involving corporate misreporting of financial results. Last week, Enron Corp.’s auditor, Arthur Andersen, was convicted of obstructing a federal investigation of Enron.
The American Institute of Certified Public Accountants said Tuesday that both Pitt’s proposal and the Senate proposal “raise uncertainties about whether auditing professionals will continue to remain actively engaged in setting auditing standards.”
Also Wednesday, Senate Majority Leader Tom Daschle (D-S.D.) said he hoped to bring the Senate accounting proposal to a floor vote in July, though he warned that it could be delayed until September.
Briefly
Well-known stock fund manager Bill Miller on Wednesday offered a new proposal to end the controversy over heavy corporate issuance of stock options to employees: Halt all such issuance.
“I support the banning of stock options, because anything that can be accomplished with options can be accomplished by giving stock directly,” Miller, of Legg Mason Inc., said.
Corporate critics say stock options are a hidden expense that companies should be forced to deduct from earnings.
Most firms don’t do so, and many executives have lobbied against proposals to force the expensing of options.
Bloomberg News
