WASHINGTON - The Senate Banking Committee's top two Republicans blasted a Security and Exchange Commission proposal to bar public companies from hiring the same accounting firm for auditing and consulting services.
In a letter Thursday to SEC Chairman Arthur Levitt, Senate Banking Chairman Phil Gramm and second-ranking Republican Richard C. Shelby urged the agency to extend the public comment period to next year and conduct a study of the plan's economic and regulatory impacts.
The agency is concerned that accounting firms providing both services might be compromised and soften their audits. But the senators said the plan would needlessly increase the cost of these services for public companies and disrupt the accounting industry.
"We are concerned that the commission has singled out the accounting profession without any tangible evidence of an acute problem," they wrote. "The commission must be certain before it acts that it has a sound basis in evidence for proceeding, that it is addressing a real problem, and that all of the foreseeable costs are outweighed by foreseeable benefits."
Community banks are concerned that the SEC proposal could raise their expenses, and say it could be hard to find two different firms in small towns. Small banks are similarly worried about the agency's consideration of a related proposal to bar financial institutions from hiring the same accounting firm to perform internal and external audits.