X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The U.S. Chamber of Commerce wants lawmakers and regulators to take steps, including tort reform and improvements to liability insurance, to prevent another large auditing firm from imploding. In a report released last week, the lobbying group said that the auditing industry is “severely contracted” and that further declines in the number of auditing firms could disrupt U.S. markets. Mergers and scandals have cut the number of large accounting firms to just four from eight in 1989. The 20-page paper titled “Auditing, a Profession at Risk” calls for measures that, among other things, would bring about tort reform and would give auditors better access to liability insurance. The paper asserts that lawsuits brought by investors could undermine the Big Four accounting firms. The U.S. Chamber’s recommendations aren’t universally accepted, however; some critics say the threat of legal damages is needed to keep auditors on the straight and narrow. Big decline In the wake of industry scandals and consolidation, the number of major accounting firms has declined by half in little more than a decade. The Big Four-PricewaterhouseCoopers International Ltd., Deloitte Touche Tohmatsu, Ernst & Young International and KPMG International-now audit about 80% of U.S. public companies, according to the U.S. Securities and Exchange Commission. “While four appears to be a sustainable number, any further contraction in this industry would present a major challenge to the viability of the profession, with potential for a negative effect on public confidence in our markets,” the U.S. Chamber said in the paper. The U.S. Chamber, which says it represents 3 million businesses and organizations, echoed concerns regulators have expressed in the past two months. The report says auditing firms face growing threats from “difficult” lawsuits and “unfair” law enforcement, and it points to the collapse of Andersen, once one of the world’s biggest accounting firms. Andersen was destroyed following its indictment for obstruction of justice in the Enron Corp. scandal. The U.S. Supreme Court last year, based on what the justices called faulty jury instructions, overturned Andersen’s 2002 conviction. The justices said the instructions allowed the jury to convict the company without proof that the firm knew it had broken the law. About 28,000 employees lost their jobs in the debacle. To prevent future corporate collapses, the U.S. Chamber is calling for authorities to indict or prosecute individuals, not corporations, involved in crimes.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.