STATE OF NEW YORK
        ________________________________________________________________________
 
                                          11325
 
                   IN ASSEMBLY
 
                                       May 6, 2002
                                       ___________
 
        Introduced by COMMITTEE ON RULES -- (at request of M. of A. Englebright)
          -- read once and referred to the Committee on Higher Education
 
        AN  ACT  to amend the education law, in relation to prohibiting account-
          ants from providing financial or accounting services to certain corpo-
          rations audited by such accountant
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  The education law is amended by adding a new section 7410
     2  to read as follows:
     3    § 7410. Prohibition. No certified public accountant,  public  account-
     4  ant,  or employee, partner or associate of such accountant shall provide
     5  accounting services, other than the provision of an audit, to any corpo-
     6  ration, the shares or bonds of which are  publicly  traded,  upon  which
     7  such  accountant  has conducted an audit within the previous five years.
     8  The board of regents shall promulgate any rules and  regulations  neces-
     9  sary to implement this section.
    10    § 2. This act shall take effect on the one hundred twentieth day after
    11  it  shall  have  become  a  law; provided that any rules and regulations
    12  necessary to implement the provisions of this act on its effective  date
    13  are authorized and directed to be promulgated on or before such date.
 
 
 
 
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14453-02-2

 
BILL NUMBER: A11325
 
SPONSOR: Rules (Englebright)

 
TITLE OF BILL:  An act to amend the education law, in relation to
prohibiting accountants from providing financial or accounting services
to certain corporations audited by such accountant
 
 
PURPOSE OR GENERAL IDEA OF BILL:  This bill would require that the
accountants of a publicly traded company would not be allowed to act in
other capacities for that company.
 
 
SUMMARY OF SPECIFIC PROVISIONS:  This bill amends Section 7410 of the
Education Law.
 
 
JUSTIFICATION:  The recent downfall of Enron Corporation has resulted
in tremendous personal monetary losses for Enron's employees and its
share holders.  Enron's bankruptcy has created extreme anxiety for the
general public with regard to their own investments and pension plans.
 
Accountants have always been thought to be truly independent allowing
employees and investors to rely on the fact that audits were being done
by professionals with no interest in the publicly traded corporations.
However, that no longer seems to be the practice in the accounting
profession.
 
Accountants have acquired "interests" in publicly traded corporations in
the position of consultants. The accountants' consulting business has at
times proved to be more lucrative than their accounting business. Since
the accountants have monetary consulting interests in the publicly trad-
ed company, the accountants independence and lack of conflicts can no
longer be assumed.
 
This bill would require that if an accountant has performed an audit for
a publicly traded company, the accountant may not do any other account-
ing services, except for audits, for the publicly traded company for the
next five years. This would allow the public to presume that the
accountant has no "interest" in the publicly traded company.
 
 
PRIOR LEGISLATIVE HISTORY:  New Bill.
 
 
FISCAL IMPLICATIONS:  None.
 
 
EFFECTIVE DATE:  One hundred twentieth day after it shall have become
a law.