(Washington, D.C.) – Tom Schatz, President of the Council for Citizens Against Government Waste, today released the following statement in opposition to Sen. Paul Sarbanes’ (D-Md.) proposed legislation, the Public Accounting Reform and Investor Protection Act of 2002, which is expected to be considered in the Senate Banking, Housing, and Urban Affairs Committee on Tuesday, May 21:

“The Council for Citizens Against Government Waste opposes Senator Sarbanes’ radical proposal to create an entirely new, and duplicative, federal bureaucracy and legislate a government takeover of the accounting profession’s standards board.  While the legislation is intended to address perceived problems with the accounting profession stemming from Arthur Andersen's role in the Enron collapse, the Sarbanes proposal would be costly, unnecessary, and counterproductive.

“CCAGW believes the legislation represents an unwise overreaction to the current situation.  Creating a new bureaucracy to regulate public companies would be duplicative of the Securities and Exchange Commission’s existing enforcement authority and would likely be imposed on privately-held businesses as well.  Such an overreaching takeover of private standard-setting and professional regulation will impede the ability of entrepreneurial companies to go public.  The federal government cannot produce a clean audit of its own finances, so taxpayers should not trust Washington to impose new, burdensome regulations on the accounting profession.  Instead, bureaucrats should enforce the laws already on the books.

“The Sarbanes legislation would also limit the scope of services that can be provided by accounting firms to their clients.  The likely result will be that public companies will be required to retain the services of multiple accounting firms, which would add unnecessary and non-productive costs to business operations.

“The excess encompassed in the Sarbanes proposal will actually undermine the ability of accounting firms to help businesses grow, enhance their value, and protect workers and retirees.  CCAGW also fears the unintended consequences of this legislation, such as the eventual imposition of the proposed regulations and restrictions on any business using professional accounting services.

“CCAGW urges the Senate Banking Committee to reject legislation that hurts American businesses and undermines the economic recovery, and which will impose excessive costs on taxpayers and consumers.  CCAGW will be monitoring the development of so-called accounting reform legislation and will consider congressional votes on the legislation in its 2002 Congressional Ratings.

       The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest (one million members and supporters) nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.