U.S. Senator Daniel K. Akaka (D-Hawaii) lauded today's expedited Senate and House approval of the conference report on H.R. 3763, the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002, and urged President Bush to quickly sign the landmark measure into law. The Act would create an auditing oversight board, place restrictions on the consulting services that can be provided by auditors to audit clients, require additional corporate governance procedures and financial disclosures, authorize additional funding for the Securities and Exchange Commission, and strengthen penalties for corporate fraud. Senator Akaka, a member of the Senate Committee on Banking, Housing, and Urban Affairs, was actively involved in the Committee's development of the legislation.
"Trust is the cornerstone of our financial markets," Akaka said. "The steady disclosure of accounting scandals and corporate misdeeds has shaken public confidence and underscores the need for legislation to protect investors and restore credibility to financial markets, corporate boardrooms, and the accounting industry.
"Since 1997, there have been almost 1,000 restatements of earnings by companies. Investors have suffered substantial financial losses and are unsure of the validity of the audits of public companies. The fear that there will be additional revelations of corporate fraud or misrepresentation continues to haunt Wall Street. This corporate responsibility and accounting reform legislation is an important step toward more effective oversight and the restoration of public trust in corporate America."
The conference report retains an amendment proposed by Senator Akaka that requires the General Accounting Office (GAO) to conduct a study of the factors that have led to consolidation in the accounting industry, the impact that this has had on the securities markets, and what can be done to increase competition among accounting firms.
"Since 1989, the Big 8 accounting firms have narrowed down to the Big 5 and may soon become the Final 4," Akaka noted. "This study is necessary to evaluate the impact that consolidation has had on quality of audit services, audit costs, auditor independence, or other problems for businesses. The General Accounting Office may also provide helpful recommendations on what can be done to increase competition in the highly concentrated accounting industry. I look forward to working with my colleagues to address this extremely important issue."
