AICPA Chairman Welcomes SEC Audit Ruling

by Mike Godfrey, Tax-News.com, Washington

28 January 2003

In an interview this week with the Electronic Accountant news service, chairman of the American Institute of CPAs (AICPA), William Ezzell praised the Securities and Exchange Commission's decision not to ban audit companies from offering tax advice to their clients.

The row over accounting firms which offer both auditing and consulting services to the same clients erupted in the wake of the Enron collapse, and resulted in the passing of the Sarbanes-Oxley law last summer; a corporate reform law which sought to severely limit the consulting services accountants can sell to companies which they also audit.

However, last Wednesday, the SEC - which has been tasked with implementing the sweeping reform law - voted 5-0 in favour of allowing accountants to offer many kinds of tax consulting to audit clients, and shifted the onus of deciding which cases are appropriate to the company's internal audit committee.

Mr Ezzell told Electronic Accountant that he believed that the SEC had struck just the right balance with its decision, explaining that:

'The final rule is consistent with the intent and spirit of the Sarbanes Act itself. The act made it clear that tax services were not considered prohibited. It also sent a strong message to audit committees that they involve themselves not only in what's required when approving audit and non-audit fees, but in particular with respect to tax transactions, to be comfortable and be sure there's a business purpose there.'

The SEC's verdict has also been welcomed by accounting groups in the United Kingdom. Speaking last week, Peter Wyman, president of the Institute of Chartered Accountants in England & Wales announced that:

'This is fantastic news. They are only banning the things banned under Sarbanes-Oxley and are saying everything not banned must be overseen by the audit committee, which is what we have in the UK anyway.'

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