US firms in frenzy over new laws

Link: SEC concedes ground on Sarbanes-Oxley

The Securities and Exchange Commission will publish stringent new guidelines next week, designed to improve auditor independence. Clumsy wording in earlier proposals has raised doubts about potential conflict of interest when performing both audits and tax work at the same client.

Corporate America, shaken by scandals such as Enron, has responded by putting tax work on hold even though the SEC has yet to rule that firms cannot provide it.

Ernst & Young wrote to the SEC to call for clarification, saying ‘conflicting signals in the commission’s release’ had resulted in a sharp drop in tax assignments pending the issuing of a final rule.

The American Institute of Certified Public Accountants has also criticised the SEC proposals and said the uncertainty robbed the profession of work. ‘We have asked the SEC quite specifically to clear up ambiguity,’ a spokesman said.

Recent corporate governance legislation has already banned accountants from doing most non-audit work at their audit clients. Tax work is almost the last remaining source of additional revenue, alongside audit work with its typically low margins.

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