In 1997, the Subcommittee on Reports, Accounting, and Managing of the United States Senate Committee on Governmental Affairs (the Metcalf Committee) released a report titled “The Accounting Establishment,” in which it expressed deep concern about “improving the professionalism and independence of auditors”:
The committee is also committed to fair competition as a basic principle of the Nation’s economic system. The benefits derived from professional self‐regulation carry with them a corresponding responsibility of self‐restraint from engaging in activities that detract from professional ideals. The subcommittee firmly believes the important function of independently auditing, publicly owned corporations should be and is financially rewarding and personally satisfying in its own right without any need for engaging in activities that appear to detract from professional responsibilities. (Italics added.)1
Whether the regulatory scrutiny worked during the 1970s to the 1990s is a matter for dispute. A series of high‐profile corporate accounting “frauds that auditors missed at companies including Cendant, Sunbeam and Livent occurred. Public shareholders lost hundreds of millions of dollars in these cases, and confidence in accountants was shaken.”2
[In] January , partners and employees at PricewaterhouseCoopers were found by the S.E.C. to have routinely violated rules forbidding their ownership of stock in companies they were ...