(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today declared its opposition to Sen. Paul Sarbanes’ (D-Md.) proposed Public Accounting Reform and Investor Protection Act of 2002, expected to be considered by the Senate Banking, Housing, and Urban Affairs Committee on Tuesday, June 18.

“Despite a supposed redraft of the legislation, Sen. Sarbanes’ bill remains an extreme and unnecessary proposal to create an entirely new – and duplicative – federal bureaucracy.  It amounts to a government takeover of the accounting profession’s standards board,” CCAGW President Tom Schatz said.  “While the legislation is intended to address accounting problems stemming from Arthur Andersen's role in the Enron collapse, the Sarbanes proposal would be costly, unnecessary, and counterproductive.”

“This legislation is an unwise overreaction to the current situation,” Schatz also said.  “Creating a new bureaucracy to regulate public companies would be duplicative of the Securities and Exchange Commission’s existing enforcement authority and would likely be imposed on privately-held businesses as well.  Such an overreaching takeover of private standard-setting and professional regulation will impede the ability of entrepreneurial companies to go public.”

“The federal government cannot produce a clean audit of its own finances, so taxpayers should not trust Washington to impose new, burdensome regulations on the accounting profession.  Instead, bureaucrats should enforce the laws already on the books,” Schatz continued.

The Sarbanes legislation would also limit the scope of services that can be provided by accounting firms to their clients, which would likely result in public companies being required to retain the services of multiple accounting firms, adding unnecessary and non-productive costs to business operations.

“The excess encompassed in the Sarbanes proposal will actually undermine the ability of accounting firms to help businesses grow, enhance their value, and protect workers and retirees.  CCAGW also fears the unintended consequences of this legislation, such as the eventual imposition of the proposed regulations and restrictions on any public, private, or nonprofit business using professional accounting services,” added Schatz.

“CCAGW urges the Senate Banking Committee to reject this legislation.  It will hurt American businesses, undermine the economic recovery, and impose excessive costs on taxpayers and consumers.  CCAGW will be monitoring development of the so-called accounting reform legislation and will consider congressional votes on the legislation in its 2002 Congressional Ratings,” concluded Schatz.       

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest (one million members and supporters) nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.