Levitt reveals all on auditor independence
Harvey Pitt, the current head of the US financial watchdog, the Securities and Exchange Commission, was once one of the leading opponents of measures to improve auditor independence, a new book has claimed.
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Indeed, the battle over auditor independence brought Pitt head to head with the former head of the SEC, Arthur Levitt, whose new book – Take on the Street: What Wall Street and Corporate America Don’t Want You to Know – details his struggle with the big accounting firms to introduce new rules which would ensure auditor independence.
Levitt reveals that Pitt, while working for law firm Fried, Frank, Harris, Shriver and Jacobson, representing the accounting industry during negotiations to set up a new US standard setter to be known as the Independence Standards Board.
But Pitt then helped author a report for the American Institute of Certified Public Accountants that questioned the need for ‘national standards’.
Pitt’s report suggested broad principles but proposed firms write their own customized rules. More shockingly for Levitt, the report outlined no plan for ‘enforcement’.
‘Even after becoming SEC chairman Pitt continued to hold the view that the growth of consulting does not interfere with auditor independence,’ writes Levitt.