[Congressional Record (Bound Edition), Volume 148 (2002), Part 11]
[Extensions of Remarks]
[Page 15221]
[From the U.S. Government Publishing Office, www.gpo.gov]




       CONFERENCE REPORT ON H.R. 3763, SARBANES-OXLEY ACT OF 2002

                                 ______
                                 

                               speech of

                           HON. DIANA DeGETTE

                              of colorado

                    in the house of representatives

                        Thursday, July 25, 2002

  Ms. DeGETTE. Mr. Speaker, I rise in support of the conference report 
to H.R. 3763, the ``Public Company Accounting Reform and Investor 
Protection Act.'' This agreement accepts almost every Democratic 
proposal contained in the ``Sarbanes'' bill and has only been altered 
by adding increased penalties for corporate crimes. I am pleased that 
the Republicans in Congress agreed to the much stronger Democratic 
proposals that will reach to the very roots of the problems in 
corporate America that caused the collapse of companies like Enron, 
WorldCom, and Adelphia. Unfortunately, the country will most likely 
continue to see companies fall due to accounting improprieties and, 
while I believe this is a strong bill, more must certainly be done. 
However, the changes in our nation's financial accounting structure 
contained in this agreement will strengthen the confidence and trust of 
investors and will increase the transparency and acceptability of 
financial statements.
  The agreement that we are considering today is almost identical to 
the Democratic proposals contained in the ``Sarbanes'' legislation that 
passed the Senate 97-0. The fact that the Republicans accepted the 
Democrats' position certainly shows that the Republicans in Congress 
are feeling the heat over corporate accountability. After all, the 
American public trusts Democrats to fix the problems in corporate 
America and to increase investor confidence in the markets.
  The proposal offered by Republicans to deal with corporate abuse was 
to increase penalties for corporate crime, coupled with weak, industry-
controlled standard-setting bodies. They wanted to deal only with the 
``bad apples'' instead of getting to the heart of the problem. The 
conference committee agreed to accept their increased penalties for 
crime. But, the conference committee recognized that corporate abuses 
will not end until Congress makes changes that attack the root of the 
problems. So the conferees accepted the Democratic proposals almost in 
their entirety.
  As we have seen from the collapse of Enron and other large 
corporations, auditors had guiding principles that were extremely weak 
and easily ignored by accountants and corporate management. 
Additionally, accounting improprieties were purposely overlooked 
because the auditors became too cozy with the companies they audited 
and made huge profits from non-audit consulting services. To address 
these problems, this agreement creates a new and independent accounting 
board that has authority to establish auditing standards, investigate 
accounting firms that conduct audits of publicly-traded companies, and 
enforce their rules. The agreement also mandates auditor independence 
and bans most non-audit consulting services.
  As we have seen in the past, much-needed accounting reforms were 
impeded by industry officials who threatened to withhold funding from 
the Financial Accounting Standards Board (FASB). The new auditing board 
and the current FASB will be given an independent funding stream to 
ensure that important financial standards will not be senselessly 
squashed by greedy industry executives.
  The agreement also increases and strengthens corporate governance by 
requiring senior executives to attest to the accuracy of their 
company's financial statements, under penalty of law. It also requires 
corporate executives to repay any compensation or profits received as a 
result of their accounting trickery.
  Unfortunately, this agreement overlooks some issues that must be 
addressed, including expensing stock options and mandatory auditor 
rotation. Stock options that are not included on a company's financial 
statements can misrepresent the true value of a company. I am pleased 
that some companies have taken it upon themselves to include employee 
stock options on their financial statements and I am also pleased that 
the FASB has indicated that it will move quickly on a rule for 
expensing stock options. Additionally, requiring companies to rotate 
their auditors is very important to ensure that senior executives and 
the people auditing their companies do not become too cozy and allow a 
company to get away with accounting tricks. While these issues are not 
included in this agreement, I look forward to continue working on 
finding ways to deal with them.
  This agreement goes to the root of the problem of corporate abuse. It 
is strong and comprehensive, and will increase investor confidence, 
transparency, and the strength of the markets.

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