Man Without Qualities

Sunday, July 20, 2003

More Disconnects At The SEC

The Securities and Exchange Commission, fresh, tanned and rested from its unbelievably stupid and counterproductive destruction of Arthur Andersen, is now seeking to suspend Ernst & Young from accepting new public-company audit clients for six months.

The Wall Street Journal reports: The SEC matter, now pending before an administrative-law judge in Washington, accuses Ernst of violating auditor-independence rules during the late 1990s by entering a marketing agreement with PeopleSoft Inc. to sell the Pleasanton, Calif., company's software at the same time that Ernst was PeopleSoft's auditor.

The SEC seems to be approaching a point where instead of the "Big 4" or "Big 3," public companies will have recourse to the "Big Zero" for their audits - and investors will have nobody on whom to rely. That way, there will be no risk of a headline appearing such as "National Accounting Firm Accused of Wrongdoing" that might embarrass the SEC.

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