KPMG LLP chairman Stephen Butler today reaffirmed the need for the accounting industry, regulators, standard setters and all other interested parties “to come together in the public interest” for a major overhaul of the financial reporting and disclosure model.

“KPMG has for several years urged the modernization of the current system of investor information. It’s finally time to move the accounting model of the Industrial Age into the Information Age,” Butler said. “Specifically, we can no longer ignore the intangible assets of knowledge-based companies or be satisfied with a leisurely, quarterly, after-the-fact reporting cycle. Even a perfect audit of less-than-relevant and out-of-date information will not do investors much good.”

Terming the issue of non-audit services a “red herring” in the current controversy over corporate accountability, Butler said, “Concerns over perceived conflicts between audit and non-audit services have so far dominated the public debate over the role of the auditor. This issue, raised anew by the Enron matter, is making it difficult to move on to the larger issues of modernizing the financial reporting system. Therefore, KPMG supports prohibiting auditors from performing systems integration consulting and internal audit outsourcing services for public audit clients. I believe we should accept previously proposed limits on non-audit services and move forward,” he said.

KPMG did not support a rule proposed by the SEC in 2000 that would have imposed new prohibitions on provision of certain non-audit services to audit clients. Nevertheless, Butler acknowledged the continuing controversy over non-audit services has impeded progress on broader reforms. “Let’s put concerns about investor perceptions of auditor ‘conflicts of interest’ to rest, Butler said. ”Let’s adopt the remaining key provisions of the original SEC proposal and agree that accounting firms will not provide technology systems design and integration and internal audit outsourcing services to their audit clients. Then let’s all come together to confront the real challenge of ensuring timely, relevant, and high-quality information to the investing public.”

“As a businessman, as an auditor who loves the profession I’ve spent my life in, and as someone who takes seriously our profession’s duty to the investing public, this is what I worry about every day … there is no greater challenge to our common public obligation than keeping the financial reporting system sound and vibrant for the 21st century. KPMG and the accounting profession are ready to join … in this work immediately.”