SEC compromise on cards.
As the US prepared to go to the polls to elect its next president, there were increasing signs this week that the Securities & Exchange Commission was close to a compromise with the accounting profession over auditor independence.
Speaking in Las Vegas last week at the American Institute of Certified Public Accountants council meeting, Arthur Levitt, chairman of the SEC, said: ‘In recent weeks, I’ve sensed a new willingness by those in the profession who have expressed serious concern about the rule-making to come to the table and share their concerns.’
Levitt praised the role of PricewaterhouseCoopers and Ernst & Young in seeking a compromise. Levitt said: ‘Since proposing the commission’s independence rule-making initiative, two firms, PwC, led by Jim Schiro, and E&Y, headed by Phil Laskawy, have engaged in a meaningful dialogue with commission staff and came up with thoughtful and constructive comments which have been extremely useful to the commission in thinking through these issues.’
In a statement, Philip Laskawy, E&Y’s chairman, said: ‘We are confident that we can develop a workable solution to this situation. We are working with the SEC and the other firms toward that goal.’
During the recent hearings held by the SEC in Washington, DC, the two Big Five firms presented their own proposals on the provision of non-audit services to clients.
The proposals would rule out large IT consulting projects for the firms.
PwC is currently in negotiations with Hewlett-Packard to sell its consultancy arm, and E&Y has already sold its management consultancy division to Cap Gemini.
KPMG is still pursuing an IPO for its consultancy practice, while Deloitte & Touche remains determined not to hive off its consultants.
A spokesman for D&T in the US confirmed that talks were continuing with the SEC and that the firm was participating in working out a compromise.
It had been anticipated that Levitt would deliver his final report before the presidential elections, though it is more likely the report will be delivered before the new president takes office in January 2001.