Accounting industry oversight board votes to disband amid Enron heat

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Posted 1:26PM on Wednesday, January 23, 2002

WASHINGTON - A board that oversees the accounting profession has voted to disband after raising concerns about proposed changes in the way firms are regulated following the collapse of Enron. The five-member Public Oversight Board said Security and Exchange Commission Chairman Harvey Pitt's proposal last week for a new private-sector body to regulate the accounting profession would strip it of its reason to exist. In a letter Monday to Pitt, board chairman Charles A. Bowsher complained that the proposal was made after consultations with the Big Five accounting firms, but without talking to board members, who are supposed to represent the public interest. Pitt, a securities lawyer, had represented Big Five companies before President Bush chose him to head the SEC. "We don't think the new plan is a good one," Bowsher told The New York Times. "Every once in a while, when these things happen, you have to be willing to resign." The autonomous, private-sector board plans to disband by March 31. In a letter to Bowsher released by the SEC Wednesday, Pitt urged the board to reconsider and said it would be strengthened under his proposal. In a speech last Thursday, Pitt proposed creating a Public Accountability Board that could perform investigations of accounting firms and conduct disciplinary proceedings. In the letter to Bowsher, Pitt said the Public Oversight Board "would have direct involvement, not just oversight of two important functions: auditor discipline and quality control monitoring." The Public Oversight Board was created in 1977 to oversee the accounting industry, helping to ensure that audited financial statements of public corporations are accurate. The accounting industry has come under greater scrutiny with the collapse of energy giant Enron and questions about the audits performed on it by Arthur Andersen.