Consumer groups urge SEC to appoint audit board with "no ties" to accounting industry

WASHINGTON – Five of the nation’s leading public interest groups have called on the Securities and Exchange Commission to appoint an auditor oversight board made up entirely of individuals who are “strong, unwavering advocates of audit reform.” The Consumer Federation of America, Consumer Action, U.S. Public Interest Research Group Consumers Union and Common Cause are asking the SEC to appoint persons who are “known and respected” within the regulatory and who do not have significant ties to the accounting industry. Under the recently enacted Sarbanes-Oxley Act, board members must be appointed by the end of October. “Because of the central role the auditor oversight board will play in improving the quality of corporate disclosures,” the consumer group letter read, “getting the board off to a strong start is key to restoring investor confidence. A board made up of outspoken advocates for reform – individuals who are unlikely to back down in the face of any political pressure the accounting firms are able to exert – is essential to that process.” The groups called on the commissioners to fulfill the requirements of the Sarbanes-Oxley Act by taking the following steps: * appoint oversight board members who are determined advocates for reform and are “known and respected within the regulatory and investor advocacy communities as knowledgeable individuals of utmost probity;” * select accountant-members of the board who do not have significant ties to the accounting industry; * ensure that all board members have both the financial expertise necessary to knowledgeably evaluate issues that come before the board and the commitment to raise the quality of public audits; * impose a cooling-off period of at least two to three years on all accountant members, because such a period would “offer an excellent opportunity for accountants to demonstrate the public interest and investor protection commitment that the new law imposes on board members;” * select non-accountant members who are independent of the accounting industry; and * appoint a chairman who is not an accountant, who has the “prominent public profile that will provide real credibility to the board, and who has been an outspoken champion of the strongest possible oversight board.”