(Washington, D.C.) - Today, U.S. Senator Patty Murray voted for S.2673, the Public Company Accounting Reform and Investor Protection Act of 2002.
Senator Murray's statement follows:
Mrs. MURRAY. Mr. President, over the past year as Americans have worked hard to restart our economy, we have been hit by report after report of irregularities, misconduct, and blatant conflicts of interest by corporate executives, auditors and brokerage firms.
The current corporate and auditing scandals are hurting American families. Thousands of jobs and retirement accounts have disappeared. Millions of current investors have watched their gains evaporate. Our economic recovery looks more distant. And most importantly for our long-term prosperity, investors are no longer confident that the financial information provided by public companies and their auditors is accurate.
Congress cannot restore the jobs and retirement savings caused by this wave of corporate and auditing scandals. It can act to strengthen oversight of the accounting industry, to demand greater responsibility from corporate executives, and to address conflicts of interest in brokerage firms.
Today I am voting for reform. We need to send a strong message to working and retired Americans, to investors, and to the executives and auditors of publicly-held companies that this Senate will act to restore accountability and faith in our free market system.
The Senate's bipartisan accounting reform bill will do just that.
First, the bill limits its scope to publicly-held companies. The bill does not attempt to federalize accounting oversight. Instead, it strengthens the federal government's historic role of regulating publicly-traded companies and their auditors. The state boards of accountancy will continue their important role of regulating accountants who audit private companies.
Second, the legislation establishes a strong, independent Public Company Accounting Oversight Board. The board is empowered to set auditing, quality control, and ethics standards, to inspect registered accounting firms, to conduct investigations, and to take disciplinary actions. As a check on the board's power, its decisions are subject to oversight and review by the Securities and Exchange Commission (SEC).
Third, this bill seeks to ensure that auditors are fulfilling their public duties by ending potential conflicts of interest. Large accounting firms typically provide both audit and non-audit services to their public company clients. The legislation would prohibit auditors from performing specific non-auditing services, unless those services are approved on a case-by-case basis by the Public Company Accounting Oversight Board. All legal non-audit services would need to be approved by a public company's audit committee.
Fourth, the Senate legislation demands that corporate leaders take greater responsibility. The bill requires that chief executive officers (CEOs) and chief financial officers (CFOs) certify financial reports, outlaws fraud and deception by managers in the auditing process, prevents CEOs and CFOs from benefitting from misstatements made in their financial reports, and prohibits corporate decision-makers from selling company stock at a time when their employees are prohibited from doing so.
Fifth, the Senate bill would limit the growing pressure and conflicts of interest that affect the independence of stock analysts. Just as investors need to know that a company's financial reports are accurate, so should investors expect objective opinions from stock analysts.
Finally, the bill would authorize additional funding for the SEC and would establish independent sources of funding for the new oversight board and FASB. As a member of the Senate Appropriations Committee, I will support full funding for the SEC.
We need to work to prevent future scandals. We also need stronger criminal laws and penalties to address fraud and abuse by corporate executives and auditors. During last week's debate I voted for three amendments, including an amendment by Senator LEAHY, that would close gaps in current law.
Mr. President, I know some of my constituents in the accounting and business communities are concerned by a few of the steps in the Senate bill. As I talk to certified public accountants in my state, they have emphasized that it is critical to encourage greater competition in the public accounting field. I agree investors would be better served by more competition. The bill requires the Comptroller General, in consultation with various agencies and organizations, to identify the factors that have led to the consolidation of public accounting firms since 1989, the impact of consolidation, and ways to address it. While a study does not guarantee action, I look forward to reviewing its findings.
Mr. President, it's time to restore confidence in corporate financial statements. It's time to hold people accountable who violate the public trust. I urge my colleagues to join me in supporting this legislation.