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.