The head of the Securities and Exchange Commission defended to senators Thursday his meeting with accounting industry executives on a post-Enron reform proposal, disputing accusations he improperly excluded public officials.
SEC Chairman Harvey Pitt also urged the Senate Banking Committee not to bar big accounting firms from providing consulting services to companies whose books they audit.
Pitt acknowledged that allowing accounting firms to do both auditing and consulting for the same corporate clients "can, and in a number of situations clearly does, create conflicts" of interest. But the problem "cannot be resolved by simplistic solutions," Pitt said.
The accounting industry is under scrutiny following Enron Corp's bankruptcy, the largest corporate failure in US history. Enron's former auditor, Arthur Andersen LLP, pleaded innocent Wednesday in Houston to a federal charge of obstructing justice in shredding documents and deleting computer files related to Enron.
Senator Paul Sarbanes, the committee chairman, questioned Pitt about his private meeting in December with representatives of the accounting industry.
Two members of the board that oversees the accounting industry denounced Pitt's action earlier this week, saying he excluded them from consultations on his proposal for a new private-sector body to discipline accountants. They said Pitt's move prompted the five members of the Public Oversight Board to vote in January to disband on March 31.
Pitt disputed their version of events and said he doubted that was the real reason for the board members' resignation. He said he has embraced all points of view and groups in his consultations on various issues.
"I'm not going to get down in the muck with some of the accusations that people have made," said Pitt, in his first pointed public exchange with lawmakers since becoming SEC chairman last summer.
Pitt insisted he had consulted with the oversight board members "long before we ever met with any of the CEOs" from the accounting industry.
In that meeting, he said, "Nobody negotiated, nobody talked about what kind of a deal we could make." Rather, Pitt recounted, he warned the accounting executives there were major problems with their industry and they had to act to remedy them.