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SEC cut accounting report
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January 29, 2002: 9:03 a.m. ET
Report: After Pitt became chairman report "just petered out."
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NEW YORK (CNN/Money) - The Securities and Exchange Commission abandoned a report detailing flaws in the accounting industry's peer review process when Harvey Pitt became SEC chairman in August 2001, according to a newspaper article Tuesday.
The report essentially picked apart peer reviews of Big Five accounting firms and stated that they often contained what the SEC staff considered major mistakes, the Wall Street Journal reported.
In the final peer assessment of an accounting firm's work, the mistakes were often ignored, according to the paper.
Under the peer system, accounting firms review each other's work every three years, and it was just Aug. 31, 2001 when Arthur Andersen received what it called "the most extensive peer review in the firm's history," from Deloitte & Touch LLP, the Journal reported.
Months later, Andersen came under fire after it failed to spot or report accounting violations at Enron, the now collapsed Houston-based energy trader.
Arthur Levitt, the former chairman of the SEC, commissioned the accounting report, but a spokeswoman with the agency told the paper it "just petered out" when Pitt assumed the chairman's role.
There is no specific information that Pitt canceled the report, but he previously worked as a lawyer for all of the Big Five accounting firms, as well as the industry trade association, the American Institute of Certified Public Accountants, according to the Journal.
While with the AICPA, Pitt was the main author of an industry document written on behalf of the trade group, arguing against SEC attempts to restrict the work accounting firms could do for the companies they audit, the paper reported. 
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