Washington (Feb. 22, 2002) -- Accounting firms need to work together to root out fraud in the companies they audit, Securities and Exchange Commission chairman Harvey Pitt said Friday.

During a speech in Washington, Pitt said that if accounting firms combine efforts to come up with a system of structuring audits to ferret out wrongdoing, it "would ensure that greater resources could be applied to the problem more effectively."

And it would also go a long way to treating the black eye the profession has suffered post-Enron, showing the public that the accounting industry does care about "improving the safeguards our system offers investors," Pitt said.

Referring to an auditor's controversial right to sign off on a company's financial statements as long as they don't detect "material misstatements" or direct evidence of hanky panky, Pitt said accountants must now hold themselves to a higher standard.

"The fact that no one can guarantee that fraud has not been perpetrated does not mean...that we cannot, or should not, improve the level and quality of audits," Pitt added.

-- Electronic Accountant Newswire staff

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