Accounting Firms Form Policy Group

The accounting industry has formed a new group to build support for its policy positions in Washington, luring the Securities and Exchange Commission's congressional liaison to help.

The group, the Center for Audit Quality, is backed by the industry's biggest firms, including KPMG, PricewaterhouseCoopers, Deloitte Touche Tohmatsu and Ernst & Young. The group said yesterday that it hired Jane O. Cobb, director of the SEC office of legislative affairs, to be its director of operations.

"The purpose is to bring together the public company accounting profession with a focus on the issues that are in the public domain," Cindy Fornelli, the group's executive director, said in an interview. "Our goal with everything we do at the center is to improve audit quality."

Auditing companies have been under fire from lawmakers and the SEC since accounting frauds at Enron and WorldCom eroded investor confidence. The 2002 Sarbanes-Oxley corporate governance law established the Public Company Accounting Oversight Board to regulate the industry and imposed new rules limiting auditors' ability to perform consulting services.

"Anytime you get regulated in that manner, you want some input in how the regulator operates," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. Cobb "had experience with Congress, and she had experience with the SEC. Those are the two entities overseeing" the oversight board.

The center's governing board includes the chief executives of Ernst & Young, KPMG, BDO Seidman and Grant Thornton. James H. Quigley, the chief executive of Deloitte's U.S. unit, and PricewaterhouseCoopers Chairman Dennis M. Nally will also sit on the board.

Fornelli said the group will focus on topics such as auditor protection from lawsuits, Sarbanes-Oxley and how companies report financial information.