The Senate Banking Commitee has already approved legislation that would impose the tightest restrictions on accounting and auditing procedures of publicly-traded companies.
The plan, sponsored by Sen. Paul Sarbanes, D-Md., would:
— Create a five-member board made up of two accountants and three who have not worked in the accounting industry. The board would be overseen by the Securities and Exchange Commission, which also would appoint its members in consultation with the Treasury Department and the Federal Reserve Board. It would have subpoena authority and disciplinary powers and be funded by fees from public companies.
— Restrict a wide range of consulting and other non-auditing services that accounting firms may provide to their audit clients, including bookkeeping, financial systems design and human resources and legal services. Accountants would be allowed to provide tax services if the company's audit committee gave its approval.
— Hold company directors directly responsible for the accountants preparing financial reports, and companies' audit committees would be responsible for the appointment, compensation and oversight of the auditors.
— Require the SEC to impose new rules on financial analysts to prevent conflicts of interest.
— Give $776 million to the SEC to hire 200 auditors and investigators.