July 25, 2002
Today, the House of Representatives overwhelmingly passed tough corporate reform legislation to create a strong, independent oversight board, increase civil and criminal penalties on corporate wrongdoers. Congressman Adam Smith (D-Wash.) issued the following statement today after the 412-3 vote to approve the House-Senate conference report on corporate reform:
“Today’s passage of the Public Company Accounting Reform and Investor Protection Act is an important step forward in restoring investor confidence in our economy.
“Recent announcements that profits and earnings were inflated, devastating bankruptcies, and plummeting investor confidence demonstrated that we needed to take a look at our regulatory and legal framework for corporate oversight.
“The bill takes an important and much-needed step towards greater auditor independence, including a GAO study of mandatory auditor rotation. I believe rotation would substantially improve an auditor’s independence, thereby leading to more reliable audits. While I realize the accounting industry strongly opposes rotation, I look forward to seeing this study and determining if mandatory rotation would be in America’s best interest.”