With stunning swiftness, the House and Senate resolved differences this week in separate sets of legislation designed to squash corporate fraud and reorganize the accounting profession.
In the wake of escalating scandals from Enron to WorldCom, the nation’s lawmakers passed the toughest corporate reform legislation in decades.
The measure, which President Bush backs and says he will sign into law, toughens penalties for corporate fraud and holds chief executives personally responsible for certifying their companies’ finances.
Most importantly for the accounting profession, it moves oversight to an independent board with subpoena powers, which will ultimately be overseen by the Securities and Exchange Commission. And in an effort to end questions about conflict of interest, the bill forbids accounting firms from offering a range of consulting advice to their audit clients, including financial systems design.
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