Washington (April 25, 2002) -- In the wake of the Enron disaster, the House late Wednesday adopted legislation to tighten oversight of the accounting profession and toughen corporate disclosure rules.
The legislation, H.R. 3763, "Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002," passed in a 334-90 House vote, would establish a new regulatory body to oversee the accounting profession and discipline auditors, replacing the current system of self-regulation.
In a statement responding to the legislation, the American Institute of CPAs said the bill includes "unprecedented and rigorous reforms in the discipline and oversight of the accounting profession."
"Self-regulation has been part of our profession for nearly 110 years, but we appreciate that the times call for special measures to restore investor confidence," the AICPA said. "We have heard the bipartisan will of the Congress and are prepared to work cooperatively in moving to the new independent regulatory body mandated by the bill."
The bill approved Wednesday would forbid accounting firms from offering some consulting services to companies whose books they audit and require audit papers to be kept for seven years.
An alternative to the bill proposed by Rep. John LaFalce of New York was rebuffed in a 219-202 House vote. LaFalce's proposal would have also required company executives to personally certify the accuracy of corporate financial statements. And it would also have enabled the Securities and Exchange Commission to strip stock bonuses from executives who falsify statements and mandated that companies change their accounting firms every few years.
-- Electronic Accountant Newswire staff
