Payback time for the US profession

With George W. Bush embarking on four more years in the White House, following his hard-fought victory over Democrat senator John Kerry, accountants may breathe a sigh of relief.

After all, it is no secret that employees in the Big Four firms have contributed heavily to the US president’s campaign. Last month, Accountancy Age revealed that US accountants donated $1.7m (nearly £1m) to the Bush campaign, with PricewaterhouseCoopers’ employees offering up $505,800 alone.

The reward for this support is likely to be a less hands-on approach to financial regulation. This in turn should mean less onerous burdens on dual-listed companies – and firms working with them – on both sides of the Atlantic.

Traditionally, Republicans have taken a more free-market approach to regulating business, while Democrats advocate greater controls. Both Kerry and Bush stood true to their party principles on this matter throughout the election campaign.

Washington DC-based law and lobbying firm Williams and Jensen looked into the regulatory stances of both candidates, and claimed Kerry, who had already introduced a bill in the Senate to address market timing, late trading and oversight, would have pushed for more regulations on issues such as hedge fund registration. Bush, according to the firm, would not.

A Bush win means the US is likely to see less financial regulation legislation. In his victory speech, he promised to reform the ‘outdated tax code’. This will undoubtedly be an attempt to reduce the public’s tax burden, and could offer further benefits to business.

In many ways Bush can say his job is complete for now in terms of regulating financial activity. The introduction of the Sarbanes-Oxley Act and the setting up of the Public Company Accounting Oversight Board has placed far more responsibility on companies, accountants and their corporate governance regimes, while providing the US with extra-territorial powers that initially caused outrage.

Many US and UK observers feel the current administration went a step too far with this tough new legislation. And its introduction certainly quietened the controversy surrounding the close relationship between the Bush administration, Enron, and its former chief executive Kenneth Lay.

One of the few major upcoming regulatory decisions the Bush administration has to deal with will be choosing who to replace William Donaldson as chairman of the Securities and Exchange Commission, the nation’s financial watchdog.

Donaldson, who often sided with Democratic commissioners, is standing down when his term expires in 2007. Bush is unlikely to pass up the opportunity to install a more Republican-leaning figurehead.

Perhaps more significant for the accounting community were the concurrent elections for places in Congress, where the issue of whether US companies should be forced to expense stock options to the profit and loss statement is being debated.

So far the discussions have been largely bi-partisan, but if more of the new senators and members of the House of Representatives are against the rules, it could prove harmful to the goal of convergence between US and international accounting standards.