WASHINGTON - Federal Reserve Board Governor Laurence H. Meyer said Wednesday that the central bank supports a recent Securities and Exchange Commission proposal to bar banks and other companies from using the same firm for internal and external audits.

For several years the Fed has been urging banks under its supervision to use separate firms to perform these audits, Mr. Meyer said during an SEC hearing in New York.

"Combining the internal and external auditors may have some efficiencies, because the work can serve a dual purpose of inspecting the system of internal controls and expressing an opinion about the financial statement," Mr. Meyer said. "These efficiencies, however, may come at the cost of the external auditor's appearance of independence."

Though Mr. Meyer did not discuss another provision of the same proposal, which would bar banks or others from hiring the same firm to perform auditing and consulting services, former Fed Chairman Paul A. Volcker endorsed it.

"It is clear that within large auditing firms there has been considerable tensions between 'auditing' and 'consulting' partners, tension rooted in the division of revenues and the marketing of services," he said.

The proposed rule is designed to deal with "a possible lack of diligence that may arise because of business incentives inherent in the way accounting firms are structured and compensated," he said.

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