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SEC mulls another accounting firm collapse

June 22, 2005 at 11:05 AM

WASHINGTON, June 22 (UPI) -- U.S. regulators have begun preparing for the collapse of one of the so-called Big Four accounting firms.

The likelihood that an indictment of one of the firms would kill that firm -- as witness the collapse of Arthur Andersen LLP three years ago -- Securities and Exchange Commission officials are discussing responses, the Wall Street Journal reported Wednesday.

Of specific concern is the ongoing Justice Department investigation of KPMG LLP, which may be indicted for allegedly pushing illegal tax shelters. If indicted, KPMG clients are expected to abandon the firm.

Among SEC options under consideration in such a scenario are letting companies seek a waiver from strict auditor-independence rules adopted in 2003 as part of the Sarbanes-Oxley corporate-governance act.

The agency also is discussing letting KPMG to continue performing audits, if indicted.

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