Sessions
CHAIRMAN LEVITT: I’d like to welcome everyone this morning to the first public hearing on the Commission’s proposals to modernize the rules that govern auditor independence.
Product line expansion, firm consolidation and structural reorganizations amidst an intensely competitive environment have very real ramifications for the independence of the public accounting profession.
Some say that the time is now for reasonable action. Others say no steps whatsoever are needed or even warranted. Whatever the views expressed I earnestly hope we will all see the value, at the very least, in having a fully informed and constructive public dialogue on an issue that is so central to the health of our financial markets. Timely, open and civil discussion can only advance the public interest.
There is an honest disagreement whether recent developments in the accounting profession merit, warrant modernizing the rules, but given what’s ultimately at stake, the confidence of America’s and the world’s investors, surely we can come together in good faith and argue this rule proposal on its merits.
That’s why the Commission has convened today, to listen and to learn. And I hope this hearing and others will make clear this is not an exchange only between a segment of the profession and the Commission.
Hearing Testimony:Auditor Independence
As you will see and hear today, many public officials, CEOs, financial analysts, those in the legal and academic communities, in government and investors both large and small care deeply about the independence of the accounting profession.
They know the indispensable role a critical unbiased eye plays in giving investors comfort and faith in the numbers. In recent years, whole economies around the world have faltered because of lax standards and inadequate attention to the fundamentals of high quality financial reporting.
In this country, investors have lost billions of dollars through financial frauds that were driven by an overriding desire to meet the expectations of the short-term at the expense of solid performance over the long term.
More than anyone else it is the independent auditor who stands guard in defense of the public interest. It is his duty and his unique franchise to protect and honor that interest.
That’s why I look forward today and over the next few weeks and months to a thoughtful, fair and open dialogueamong all market participants on this vitally important subject.
COMMISSIONER HUNT: Thank you, Mr. Chairman. Good morning, ladies and gentlemen. These are contentious issues and have been for years. There are strongly held views on each sides of these issues. I hope we can resolve them sooner rather than later.
I think everybody agrees that some reforms of our rules with respect to independence are needed. The big question is the extent of the scope of the reforms that are needed, and I hope we can get some meaningful discussion, as the Chairman said, from practitioners, members of the industry and members of the public to help us go forward and, first, do no harm, and to reform our rules in a meaningful and intelligent way.
COMMISSIONER CAREY: Thank you, Mr. Chairman. I’d like to express my thanks to everyone for participating today and also my thanks to the staff of the Office of General Counsel and the Office of the Chief Accountant in making this hearing possible. I know a lot of hard work went into that.
I’d just like to start out by saying that ourmarkets attract capital because investors have basic confidence in the integrity of our markets. Quality financial information and meaningful disclosure fuel that confidence.