PracticeAuditUS accounting faces tough new laws

US accounting faces tough new laws

The US accounting industry is facing tough new laws on auditor independence as the Senate votes on new legislation post-Enron.

The bill, written by senator Paul Sarbanes, chairman of the Senate’s Banking Committee, includes a ban on auditors performing most non-audit services for their clients.

Services to be banned include consulting, internal accounting and information system design, in a move designed to eliminate perceived ‘conflicts of interest’ in the wake of Andersen’s demise – Andersen performed both audit and non-audit work for the failed energy giant Enron.

A 17-4 vote in favour of the Bill, makes it increasingly more likely that it will be passed, although a hardline Republican lobby could still see it blocked.

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