Fight Erupts Over SEC's Proposed Auditing Rules
Seattle Post-Intelligencer Online (09/28/00) Vol. 5, No. 17 p.A12; Quinn, Jane Bryant

A fight has erupted over proposed rules by Arthur Levitt, chairman of the Securities and Exchange Commission (SEC), that would limit the ability of accounting firms to provide consulting services to auditing clients. The issue surrounds the independence of outside auditors who certify that corporate financial reports are accurate. The SEC believes that if an auditor is selling lucrative consulting services to corporations whose financial reports it is also checking, an obvious conflict of interest exists. However, auditors say their judgment remains sound and that the SEC has no proof to back up their proposal. Auditors have always faced conflict of interest because they get paid by the firms they audit, yet most financial reports fall within an acceptable conflict-of-interest tolerance level. Furthermore, the U.S. markets are the cleanest in the world. KMPG partner Stephen Allis says that the consulting business actually allows auditors to conduct more sound audits, because it provides knowledge and understanding of the inner workings of corporations.

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