Roseland, N.J. (Feb. 25, 2003) -- A legislative bill that would have barred accountants in New Jersey from providing virtually any non-audit service to their audit clients, has died a quick and quiet death.
State Assemblyman Neil M. Cohen of Union, N.J., has withdrawn House Bill 2684, a measure he introduced last September after Congress enacted the Sarbanes-Oxley federal law regulating the audit industry. Cohen's bill called for many of same service bans set in Sarbanes-Oxley, but, while the federal law applies only to publicly-owned companies, the state proposal restricted accountants' services to both public and private company audit clients based in New Jersey.
Cohen withdrew his bill after the New Jersey State Society of Society of CPAs waged a campaign to raise awareness that the ban could hurt non-accounting businesses, but the state society is not claiming credit. "We're not quite sure why, but we are happy it was withdrawn because it would have had a significant impact on many small businesses," said Ralph Thomas, executive director of the 14,000-member New Jersey Society.
Cohen was unavailable for comment.
A position paper the state society distributed to Cohen and other legislators notes that the services ban would force some companies to "simply forgo services essential to their business," and otherwise "result in financial statements that are less reliable," by forcing privately owned businesses to engage two CPAs to perform the services previously provided by one. The paper also makes a case that privately-held companies face different issues than those of public companies -- the subject of Sarbanes-Oxley .
The state society paper is similar to ones the American Institute of CPAs has prepared to help individual states deal with accounting industry reform in their locales. However, Thomas said his group did not seek AICPA support in its effort.
John M. Covaleski
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