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Senate Unanimously Passes Accounting Reform Legislation
Washington, DC, July 19, 2002 - The Senate recently approved by a 97-0 vote the “Public Company Accounting Reform and Investor Protection Act of 2002” (S.2673)—accounting reform legislation that would establish a Public Company Accounting Oversight Board to oversee the conduct of auditors of public companies.
The Institute has expressed its strong support for the enactment of accounting and auditing reform legislation that would bolster the efforts of the SEC and key market participants to effectively address the uncertainty investors may feel about the quality of their investments and the reliability of investing.
Under S. 2673, the proposed oversight board, subject to review by the SEC, would have the authority to:
- set auditing, quality control, and ethics standards;
- inspect accounting firms’ audit operations;
- investigate potential violations of board rules, related provisions of the securities laws, and professional accounting standards; and
- impose sanctions for violations.
Earlier this year, the House of Representatives passed H.R. 3763, the “Corporate and Auditing Accountability, Responsibility, and Transparency Act,” which would create a regulatory organization that would not have the authority to set auditing standards. There are a number of additional disparities between the House- and Senate-passed bills, and a House-Senate conference committee will meet shortly to resolve the differences between the two bills. It is expected that the President will sign accounting reform legislation into law in August.