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Washington, DC--Democratic members of the House Financial Services Committee have called upon Chairman Michael Oxley to hold hearings to examine how accounting firms market tax shelters to their audit clients and the potential conflicts of interest that could arise when those clients are audited.
More than two-thirds of the Committee’s Democrats last week sent the Republican Chairman a letter requesting the hearings. The letter cited an increasingly disturbing trend—accounting firms selling tax shelters to audit clients and their executives. The Democrats noted that this trend comes on the heels of the many accounting scandals seen last year.
“When an accounting firm markets a tax shelter to its audit clients the audit firm effectively audits its own work, creating a conflict of interest that jeopardizes the independence and objectivity of the auditor,” the letter notes.
The letter requests that witnesses be called from various accounting firms, the Securities and Exchange Commission, and the new Public Company Accounting Oversight Board, which was created by accounting reform legislation enacted last year.
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The Committee oversees all components of the nation’s housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws. |
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