SEC and Accounting Firms Near Compromise
Financial Times (10/20/00) Vol. 104, No. 42 p.4; Speigel, Peter

According to sources involved with the situation, the Securities and Exchange Commission (SEC) and the Big Five could be near a compromise on auditor independence rules proposed by SEC Chairman Arthur Levitt that would detach accountants from their consulting practices. The proposal that seeks to prohibit accounting firms from offering consulting services to their clients because of what the SEC sees as a conflict of interest would most likely force accountancies to sell their consulting arms. Apparently, the two sides have agreed on some general terms about one of the contested issues in the proposal--outsourcing internal audits. The firms have agreed, in principle, to a disclosure rule that would force them to show the amount of fees that come from consulting. However, the toughest issue in the proposal, the barring of firms from providing consulting to audit clients, remains unresolved.

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