The Business Council is asking its members for feedback on three new bills that would sharply limit the freedom of corporations and state agencies to choose consultants, accountants, and auditors.
The bills were introduced in the wake of the bankruptcy of Enron, a Texas-based energy services company.
The Council has e-mailed a brief survey to its publicly traded members to brief them on the bills and to ask how the proposed changes would affect the providing of existing business services, said Ed Reinfurt, vice president of The Business Council.
"We've not yet taken a formal position on these bills, but we're concerned that they could mandate significant disruptions to business practices without really remedying the problems identified with the Enron situation," he said.
"We also think any policy changes in these arenas should be made in Washington, not in state capitals," he added. "We can't have 50 sets of rules from 50 different states. There are many complicated regulatory and management issues involved that affect analysts, rating agencies, corporations, and professional accounting and consulting firms in many states and jurisdictions."
Two of the three bills would affect existing relationships between publicly traded corporations and their auditing and accounting firms. Each would, to varying degrees, prohibit the provision of non-audit services to firms for whom audit services are already being provided, Reinfurt said.
The bills would affect corporations incorporated in New York, auditing firms licensed by the state, and investments by the state's pension funds in publicly traded companies.
One bill (A.9831/Brodsky et al.) would prohibit corporations that file annual or quarterly reports to the SEC from having a broad range of "non-audit services" provided by any firm which prepares the firm's corporate financial audits.
That bill would also prohibit the state pension funds from investing in corporations which have audit and non-audit services provided by the same firm.
A second bill (S.6164/Skelos) would prevent certified public accounting firms or CPAs from providing "accounting services" other than an audit to any publicly traded corporation that it has audited in the previous five years.
A third bill (S.6269/Lavalle; A. 9768/DiNapoli) does not affect publicly traded firms but it would prohibit firms that audit state agencies and retirement systems from providing those entities with "non-audit services."
This bill would also limit to seven years any firm's auditing relationship with state agencies and retirement systems. And it would prevent individuals who audit state agencies from becoming employees of those agencies for at least two years after they complete the audit.