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House Panel Rejects Limits on Auditors

April 17, 2002|From Bloomberg News

The House Financial Services Committee on Tuesday rejected proposals to bar company auditors from providing a host of consulting and other services for audit clients.

The Republican-controlled panel voted along party lines to reject proposals by Rep. John J. LaFalce (D-N.Y.) that would ban auditors from providing tax, bookkeeping, appraisal, and management services for audit clients. The proposals also would bar auditors from providing investment advice or legal services to such clients.

The prohibitions would provide a "Good Housekeeping seal of approval" to the corporate audit process, LaFalce said. Republicans said LaFalce's restrictions go too far.

The committee is considering a bill written by its chairman, Rep. Michael G. Oxley (R-Ohio), to revamp regulation of the industry and establish an oversight board. Democrats said limiting the services an auditor can provide a single client will keep the audit process pure, because auditors won't be tempted to pull their punches in an effort to sign the client to a more lucrative consulting contract.

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