graphic
graphic  
graphic
News
graphic
SEC seeks accounting reform
graphic January 17, 2002: 2:22 p.m. ET

Chairman Harvey Pitt says restoring public confidence is goal No. 1.
graphic
graphic graphic
graphic
graphic
graphic       graphic
  • Andersen fires Enron auditor - Jan. 15, 2002
  • Attorney: Enron execs cooked books - Jan. 14, 2002
  • Accounting fraud on the rise - Jan. 11, 2002
  •  
    graphic
    graphic
    graphic       graphic
  • SEC
  •  
    graphic
    NEW YORK (CNN/Money) - Securities & Exchange Commission Chairman Harvey Pitt called Thursday for reform of the way accounting firms are monitored and regulated in the United States in an effort to restore public confidence in the profession in the wake of scandals involving Enron Corp. and other companies.

    "This commission cannot and will not tolerate a pattern of growing restatements, audit failures, corporate failures and massive investor losses," Pitt said in a news conference. "Somehow we have got to put a stop to the vicious cycle that has now been in evidence for far too many years."

    Pitt proposed the creation of a new body, composed mostly of representatives from the public sector, to oversee and discipline accounting firms, and he called for a reform of the triennial peer review process, which has been criticized "with some merit," Pitt said.

    His suggestions were prompted mostly by the recent collapse of energy trader Enron and the revelations of accounting irregularities that led to it. Its auditor, Arthur Andersen, has come under intense scrutiny for failing to discover or disclose problems with Enron's books that hid massive debt and helped the company avoid paying taxes.

    graphic  
    SEC Chairman Harvey Pitt
    Enron's shares lost almost all their value as the disclosures came to light, the company filed for bankruptcy and investor confidence in the accuracy of companies' financial disclosures was shaken.

    "I place restoring the public's confidence in the auditing profession to be immediate goal number one," Pitt said.

    Click here for more on the Enron collapse

    Pitt said he and others in the SEC were still trying to work out the details of the new oversight group, which would have the power to compel testimony and the production of documents, and were investigating the circumstances of Enron's collapse.

    Despite Pitt's proposals, Sen. Jon Corzine, D - New Jersey, told CNNfn's The Money Gang that the SEC should be policing the accounting firms. (WAV 597KB) (AIFF 597KB).

    Pitt did say he thought the SEC should have oversight of the new body's decisions and actions.

    Of particular interest to the SEC may be the actions of Andersen, which admitted to intentionally destroying Enron documents -- excepting the important "work papers" associated with an audit -- and recently fired the partner heading up its work on Enron.

    Andersen's actions were only the latest in a series of stumbles by accounting firms. Andersen was recently fined $7 million by the SEC, the largest penalty ever, for irregularities connected with its work on Waste Management Inc. Other venerable firms like PricewaterhouseCoopers and Ernst & Young have also had their share of trouble. graphic

      RELATED STORIES

    Andersen fires Enron auditor - Jan. 15, 2002

    Attorney: Enron execs cooked books - Jan. 14, 2002

    Accounting fraud on the rise - Jan. 11, 2002

      RELATED LINKS

    SEC





    graphic

    Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
    Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
    graphic