Industry Fighting Federal Restraints on Auditing Firms
Heller, Michele, American Banker
The financial services industry is quietly but staunchly opposed to Senate Democrats' efforts to codify walls between accounting firms' auditing and consulting businesses.
Industry officials are arguing that a law would hinder their ability to respond to market changes because it could not be changed as quickly and easily as a regulation.
"The regulatory process allows for flexibility to reflect changes in the industry," a spokesman for the Securities Industry Association said.
Steve Bartlett, president of the Financial Services Roundtable, said in a letter Monday to Senate Banking Committee Chairman Paul Sarbanes, D-Md., that Congress should not determine what consulting services an accounting firm can sell to the public companies it audits. "Congress should allow the audit committee, its designee, or the Securities and Exchange Commission to determine which specific functions" an auditor may provide, Mr. Bartlett wrote.
Senate Banking on Tuesday approved a sweeping bill that would overhaul audit, corporate governance, and investment bank analyst practices. It will be considered in the full Senate as early as July, Senate Majority Leader Tom Daschle said this week.
Like a bill the House approved in April, the Sarbanes measure would establish an independent auditing oversight board and restrict the consulting services an auditor can provide to any publicly traded companies it is checking. But the Senate bill goes further than the House bill in that it would codify existing consulting restrictions and spell out the new limits the board would enforce.
Industry officials interviewed this week said it is too early to know how seriously their companies could be affected by the provision in the Sarbanes bill that would ban audit firms from selling eight consulting services to the public companies they audit.
The House-passed bill would restrict auditors from doing internal audits or setting up information technology systems. …