June 10, 2002

The Honorable Paul Sarbanes
Chairman, Committee on Banking, Housing and Urban Affairs
U.S. Senate
Washington, D.C. 20510

RE: Support Sarbanes Accounting Reform Bill And Oppose Weakening Amendments

--- Put A Stop To "Dubious Accounting" --

Dear Chairman Sarbanes:

We are writing on behalf of the members of the state Public Interest Research Groups (PIRGs) and on behalf of all consumers and investors to commend you and other members of the committee for introducing the "Public Company Accounting Reform and Investor Protection Act of 2002." We urge committee members to support the bill and to oppose weakening amendments.

At a time when investor confidence has been shaken to the core - first by the Enron/Andersen fiasco and then by a relentless series of Page One accounting scandals and restatements involving numerous other large companies and other major accounting firms - it is critical that the 107th Congress take decisive action to restore faith in the markets and provide real assurances for consumers, small investors, retirees and pension funds that the financial numbers provided by companies and accountants are true, unbiased and adequate enough for them to keep their own hard-owned dollars in the markets.

The Public Company Accounting Reform and Investor Protection Act is expected to be marked up soon in the committee. We expect the bill will face a phalanx of industry lobbyists wielding hundreds of weakening amendments for your consideration. We believe you should reject their self-interested gutting proposals and that it is in the public's interest for your bill to pass. The committee print includes a strong package of auditor oversight, auditor independence, and corporate governance reforms.

At least one recent poll says that the primary concern of investors is "dubious accounting practices," cited by 84 percent of respondents. That's hardly surprising, since the front pages are covered with stories about audit failures and questionable bookkeeping at many more firms than merely Enron and Arthur Andersen.

Consumers and investors were disappointed when the House passed a sham reform bill that fails to ensure independent oversight of the accounting industry, As such, it also fails to restore faith in the markets. The Senate, and the full Congress, must instead enact the "Public Company Accounting Reform and Investor Protection Act of 2002," a bill that, while not everything consumers and investors seek and need in the area of auditor independence, is nonetheless a serious reform proposal that combines modest enhancements to auditor independence with improved corporate board oversight of the audit; meaningful, independent regulatory oversight of auditors; and increased resources for the Securities and Exchange Commission. We concur with the detailed list of its important provisions provided to you by the Consumer Federation of America.

In 1984, the Supreme Court called accountants the "public's watchdogs." Since then, they've become corporate lapdogs. Please help end dubious accounting and restore faith to small investors by supporting the Public Company Accounting Reform and Investor Protection Act. Please have your staff contact us with any questions at 202-546-9707. For more information on the state PIRGs' efforts to protect investors, see our special Web site www.enronwatchdog.org.

Sincerely,

Edmund Mierzwinski
Consumer Program Director

cc: Senate Banking Committee Members

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