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