PricewaterhouseCoopers LLP and the other two largest accounting firms want more officials at the companies they audit to be bound to codes of ethics in hopes such pledges would deter deceitful bookkeeping.
A proposed Securities and Exchange rule says publicly traded companies must tell investors whether they have ethical codes for top executives, and if they don't, to explain why.
Pricewaterhouse, the largest accounting firm, plus Deloitte & Touche LLP and KPMG LLP, want a broader range of employees than those singled out by the SEC to follow codes that promote honesty.
The American Institute of Certified Public Accountants, a lobbying group, wants the codes to apply to all company employees, it said in a letter to the SEC.
"Accountants are exposed to the consequences of wrongdoing by their clients," said securities lawyer Stanley Keller of Boston-based law firm Palmer & Dodge. "From that self-protective point of view, they want to see strengthened standards."
Accounting firms are facing a harsher regulatory environment as the SEC has said it will bring more cases against firms instead of focusing on individual accountants. The firms also have been humbled by the collapse of their peer Arthur Andersen LLP.
The accounting industry also will be subject to a host of new rules being implemented under corporate-governance legislation enacted in July in response to billions of dollars in profit misstatements at Enron, WorldCom and other companies.
The law directs the SEC to adopt codes-of-ethics rules by the end of January. The SEC is considering public comments on the proposal such as those submitted by the accounting firms and AICPA.
The law creates a federal accounting oversight board and bars auditors from providing corporate clients with consulting services that may pose conflicts of interest.
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