NY State Senate Hearings

NEW YORK STATE SENATE HIGHER EDUCATION COMMITTEE SENATOR KENNETH P. LaValle, CHAIRMAN
PUBLIC HEARING NOTICE

The Purpose and Mission of 2Ist Century Accounting firms and the Independence of Certified Public Accountants in the Post-ENRON Era

Date and Time:	Wednesday, February 6, 2002, 9 am. - 4 p.m.
Location:	The Graduate Center, 365 Fifth Avenue, New York, NY
Contact:	Diana Georgia, Counsel, Senate Higher Education Committee Room 806 LOB, Albany. NY 12247 (518) 455-3121

The New York State Senate Higher Education Committee has jurisdiction over professional licensure. The Chairman, Senator Kenneth P. LaValle and the Committee will conduct a public hearing on the purpose and mission of 21st century accounting firms and the independence of certified public accountants in the post-ENRON era. The collapse of ENRON has drawn a great deal of attention to the accounting profession and its role in financial markets.

Corporate accounting problems raise the issue of whether the public can demand that accountants maintain total independence from their clients in order to maintain their fiduciary duties.

The CPA profession in New York is regulated by a 100-year-old statute, the first accountancy law in the United States. The law was last substantially revised by the Legislature in 1947. Since then, however, the practice of public accountancy has evolved from its traditional role of solely providing independent accounting services to providing a host of ancillary services, which are centered around business consulting.

New York City and New York State have been, and continue to be, the financial center of the world. As such, New York State has a duty to guarantee that the profession of public accountancy remain a strong and independent voice in the financial reporting system in order to guarantee investor confidence in capital markets. For the foregoing reasons, the Committee is seeking testimony on the following issues:

1. Whether, short of returning to their traditional role of exclusively providing audit and attest services, can public accountants be independent financial voices while also performing consulting and ancillary services?
2. How can New York regulate consulting services within the accountancy profession?
3. Whether the five big accounting firms face an inherent conflict of interest because a substantial amount of their profits result from consulting services and not from auditing and accounting services?
4. What procedures are in place to identify the potential conflicts and problems faced by accounting firms? Whether such procedures are effective. If not, what additional measures should be implemented?

Testimony will be taken by invitation only.