February 2001
Congressman Dingell Calls for GAO Action
on Accounting Profession
By
David Cho
WASHINGTON—Congressman John D. Dingell (D–Mich.) last month called on the U.S. General Accounting Office to investigate how the accounting profession oversees financial reporting and auditing standards in light of recent clashes with the Securities and Exchange Commission.
In a letter sent to GAO Comptroller General David M. Walker in January, Dingell asked the organization to reexamine the accounting profession and its current governance structure, citing recent battles between the American Institute of CPAs and the SEC.
“Recent events, in particular last year’s bitter fight over maintaining auditor independence, suggest that GAO needs to take another look at the accounting profession,” Dingell stated in the letter.
Dingell, the ranking member of the House Committee on Energy and Commerce and the U.S. representative who holds the distinction of serving the longest consecutive term, spearheaded the GAO’s original investigation of the accounting profession, which led to The Accounting Profession—Major Issues: Progress and Concerns, a comprehensive report published in 1996.
In December 2000, the GAO submitted a report to Dingell and Phil Gramm (R–Texas), chair of the Senate Committee on Banking, Housing, and Urban Affairs, analyzing the major rule on auditor independence promulgated by the SEC, “Revision of the Commission’s Auditor Independence Requirements” (RIN: 3235-AH91). The rule, received by the GAO on Nov. 21, 2000, was published in the Federal Register as a final rule on Dec. 5, 2000.
After hearing public comments from a number of accounting groups, including the New York State Society of CPAs and the AICPA, the SEC adopted amendments in the new rule regarding auditor independence that modernize the SEC’s rules for determining whether an auditor is independent in light of investments or employment relationships between audit clients and auditors or their families.
Concerned about the possible impact of Dingell’s letter, the AICPA earlier this month said it was monitoring the situation closely. “We’re taking stock of the political landscape and looking at ways to respond—and the optimal timing of our response,” said AICPA Spokesperson Cynthia Lund in a memo to the State Societies. “Right now, we haven’t received any indication about the level of attention that the GAO might give this—it may be significant, and it might also turn out to be just a blip on the GAO’s radar screen.”
