(October 17 – 17:20 ET) – U.S. Securities and Exchange Commission chairman Arthur Levitt is appealing to Congress to stay out of its controversial move to regulate auditor independence.
Levitt sent a letter to various members of Congress late yesterday asking that they not intervene in the SEC’s auditor independence rulemaking process. The letter was sent to House and Senate leadership, members of the House and Senate Appropriations committees, members of the Senate Banking Committee, and members of the House Commerce Committee. Levitt said, “The controversy surrounding this initiative, unfortunately, extends beyond the substance of the proposed rule and threatens to impede the independence of an agency whose fundamental mission is to protect investors.”
He said that both PricewaterhouseCoopers and Ernst & Young have made submissions that it will consider as it works on a final rule, noting that the commission has held four days of public hearings and received 3,000 comment letters on the proposed rule. Levitt also notes that the SEC has been meeting with the Big Five accounting firms over the past few days, suggesting that these talks remain productive.
Levitt insists that the rule won’t force accountants to get out of consulting. Under the rule proposal and the submission by PwC and E&Y, firms would still be able to provide consulting services to non-audit clients, he argues, although there are 10 services that the SEC says impair independence.
“I ask, however, that regardless of what happens, you will do what you can to ensure that the voice of the commission — a voice that speaks solely and consistently in the protection of the public interest — is not silenced. Intervention in the Commission’s customary regulatory processes would set an unfortunate precedent that could undermine the SEC’s ability to carry out the mission Congress entrusted it to achieve.”
-IE Staff