STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6164
 
                    IN SENATE
 
                                    January 22, 2002
                                       ___________
 
        Introduced  by  Sen.  SKELOS -- read twice and ordered printed, and when
          printed to be committed to the Committee on 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: S6164
 
SPONSOR: SKELOS

 
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:  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 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.
 
 
LEGISLATIVE HISTORY:  New Bill.
 
 
FISCAL IMPLICATIONS:  None.
 
 
EFFECTIVE DATE:  One hundred twentieth day after it shall have become
a law.