Just One Last Thing Before I Go

Before the Securities and Exchange Commission's crusading chairman, Arthur Levitt, stepped down last month, he fired one last salvo in his campaign to advance auditor independence. Levitt sent out a letter to the audit committee chairmen of the top 5,000 public companies, essentially calling on them to be wary of procuring inappropriate consulting services from their auditors.
The letter spells out recommendations made by the Panel on Audit Effectiveness, including that audit committees obtain annual reports from management assessing the company's internal controls and that they specify in their charters that the outside auditor is ultimately accountable to the board of directors.
Levitt, the SEC's longest-serving chairman, made auditor independence one of his cornerstone issues. But it remains to be seen whether management consulting firms will take this issue seriously and what enforcement will be under President Bush's administration.