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Big Pension Fund Seeks Accounting Reform By Carrie Johnson, The Washington Post The nation's largest pension fund yesterday urged regulators to go one step further to clean up the accounting industry by banning accountants from providing tax advice to publicly traded clients whose financial statements they audit. Sean Harrigan, president of the California Public Employees' Retirement System board, said auditors continue to get about half their revenue from consulting work, mostly from tax services sold to their clients. "This is a deeply troubling situation that we feel has the significant potential to impair the objectivity of the independent auditor," Harrigan told the Senate Banking Committee. Congress and the Securities and Exchange Commission considered barring auditors from giving tax advice -- including the sale of abusive tax shelters -- as part of last year's Sarbanes-Oxley Act. Supporters of such a ban said the hope of winning or keeping expensive tax consulting projects could tempt auditors to overlook problems in their clients' financial statements. In the end, however, auditors were allowed to continue to do tax work for clients. Samuel A. DiPiazza Jr., chief executive of PricewaterhouseCoopers, told the Senate committee that tax consulting is an "integral" part of the services an accounting firm provides to clients. He said that having the same firm perform an audit and give tax advice saves clients money and improves the overall quality of audits. Edward E. Nusbaum, chief executive of Grant Thornton, the fifth-largest U.S. accounting firm, also said providing tax advice was appropriate. But, he said, his firm would support a ban on auditors selling tax shelters to clients. The Internal Revenue Service has sued several big accounting and law firms in the past year in an effort to obtain information on clients who used the shelters. At least three of the five members of the new Public Company Accounting Oversight Board, which oversees the profession, have said the board may examine the tax-shelter issue more closely. William J. McDonough, the board's chairman, said yesterday that the shelter debate "is an ongoing area of interest for us."
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© 2002 Global Action on Aging |
