A congressional subcommittee, arguing that what`s fair for public corporations is fair for public accounting firms, is asking the 16 largest CPA firms in the country to provide detailed information about their finances, clients and partners.
”Ironically, federal law requires that the public receive complete and accurate information on the corporate clients of independent auditing firms,” said Rep. John Dingell (D., Mich.), chairman of the House Subcommittee on Oversight and Investigations. ”But the audit firms have not been required to provide similar information on their own activities.”
Dingell`s subcommittee, which has been holding hearings about the accounting profession and so-called ”failed audits,” has given the CPA firms until Sept. 30 to answer the questions on a detailed, 17-page questionnaire.
Dingell said the subcommittee`s inquiry began because of ”mounting evidence of corporate failures and misconduct revealed shortly after clean audit opinions.”
The regulatory system created by Congress 50 years ago ”may not be adequate to deal with today`s problems,” he said.
Federal securities law regulates the kind of financial data publicly traded corporations must make public, as well as the frequency of such reports. Under those regulations, corporations must submit their financial statements and balance sheets to audits by independent outsiders.
The subcommittee`s questionnaire to the accounting firms is patterned after the 10-K forms that publicly traded corporations must file each year with the Securities and Exchange Commission.
