|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Deadlock Broken on Revising Audit Rule; Proposal to Rein In Accounting Costs
Carrie Johnson
Washington Post. December 6, 2006
_________________________________________________________________________
EXCERPT: Regulators have reached an agreement in principle on how to revamp a contentious accounting rule that cost businesses millions of dollars more than anticipated, removing a pair of major stumbling blocks attacked by consumer advocates. The Public Company Accounting Oversight Board, which oversees the audit industry, plans to meet Dec. 19 to present its revised version of the regulation, officials said yesterday. The rule, which mandates that auditors review corporate financial controls, is the most disputed part of the Sarbanes-Oxley law, passed by Congress in 2002 after frauds at Enron and WorldCom. Businesses had objected to the cost of complying with the law's stricter audit provision. The accounting board's chairman, Mark Olson, said the new proposed guidance, which attempts to focus auditors on areas of highest risk, would more closely align the costs of the measure with its benefits. Accounting board officials had clashed with leaders of the Securities and Exchange Commission over the issue in recent weeks. But a visit to the board's office Friday by SEC Chairman Christopher Cox helped put the process back on track. Cox had floated the idea of requiring small companies to develop financial controls, which help prevent fraud and mistakes, but forcing auditors to test the controls only on a narrow and limited basis, in a memo that was leaked two weeks ago. But investor groups howled that the proposal would gut the law. That idea now appears to be off the table, in part because of a report issued last week by a panel supported by Treasury Secretary Henry M. Paulson Jr. The Committee on Capital Markets Regulation, funded by business interests, advocated a broad overhaul of U.S. regulation and urged new protections against shareholder lawsuits. But the panel rejected the notion that small companies could evade regular testing of their internal controls. |
|
|
