The accounting industry's lobbying group will tell the new accounting oversight board on Monday that auditors should be allowed to continue to set their own rules, at least for now, despite the role that auditing lapses played in recent corporate scandals, industry and government sources said yesterday.
The American Institute of Certified Public Accountants will make its case in a bid to influence one of the major decisions facing the five members of the new board: whether to write new rules for auditors of publicly traded companies or accept rules written by the lobbying group.
Congress voted to create the board this summer in response to a series of accounting scandals. Lawmakers gave the board the power to set audit rules and to police the industry by investigating accounting firms' work and punishing misconduct.
The industry group's effort has been spearheaded by Susan Coffey, who heads its self-regulation division, and by James A. O'Malley, its head lobbyist, the sources said. Neither returned telephone calls yesterday.
The oversight board is scheduled to convene its second meeting Monday at a law office in Washington. At its first meeting two weeks ago, which also was closed to the public, board members put off deciding whether to temporarily endorse the profession's current auditing standards until a final decision on what new rules, if any, to adopt.
The accounting industry has opposed the creation of an oversight board to police it. Major firms argued that self-regulation was working, despite the problems at Enron Corp., WorldCom Inc. and other companies. When it lost that fight, the industry turned its attention to the board, hoping to persuade members to leave rulemaking largely to the profession, or at least to seek industry comment and advice if new rules are written.
Consumer groups and several members of Congress, including Sen. Paul S. Sarbanes (D-Md.), outgoing chairman of the Senate Banking Committee and the main author of the law creating the oversight board, have warned against allowing auditors to continue to write the rules. Doing so, they say, would perpetuate a system that has insulated accountants from legal liability and minimized their responsibility for detecting problems at companies.