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concerns, while providing representatives of the profession an opportunity to respond.(n67) The Moss-Metcalf hearings focused on the profession's ability to detect management fraud and its effectiveness in disclosing bribes to foreign officials, conduct later forbidden by the Foreign Corrupt Practices Act of 1977.(n68) The staff report of the Metcalf Committee went further, however, voicing concern that there was insufficient independence being maintained between large publicly-held companies and their auditors.(n69) Critics have traced part of this concern to the accounting profession's aggressive marketing of management advisory services (MAS) to their audit clients.(n70) There appears to have been little or no early resistance in the United States to the proposition that accountants could serve as advisers to and advocates for their clients while at the same time acting as their independent auditors.(n71)

A collateral issue raised by critics of accountants performing nonaudit functions is whether accountants can "objectively review their own advisory service work in a client operation."(n72) Still a further complication is the practice of accounting firms placing former employees with clients as part of their placement services.(n73) Yet another dubious practice that has recently come to the public's attention is auditors' receiving favorable loans from client banks.(n74) The professional ethics executive committee of the American Institute of Certified Public Accountants (AICPA) has proposed that all such loans be banned.(n75)

According to one critic of the accounting profession, the Metcalf-Moss hearings were largely ignored by the press and thus little demand for structural reform resulted from them.(n76) This was in contrast to the extensive coverage of later hearings conducted by a subcommittee of the House Energy and Commerce Committee under the chairmanship of Representative John D. Dingell (hereinafter Dingell Committee).(n77) The main purpose of the Dingell investigation was to determine whether the quality control structure of the accounting profession was in place and operating effectively.

In particular, the committee challenged the scope of auditors' responsibilities, the effectiveness of the profession's self-regulation program, and the potential conflict of interest inherent in the client-auditor relationship. During the year-and-a-half of hearings, the Dingell Committee heard testimony from the AICPA,(n78) government agencies,(n79) major accounting firms,(n80) academicians,(n81) and many others. The ultimate outcome was HR 4886,(n82) co-sponsored by Representatives Dingell and Wyden, which called for, among other things, extensive expansion of the scope of auditors' responsibilities. The bill was effectively resisted by the accounting profession and the SEC ostensibly because it made the auditor responsible for detecting and reporting illegal acts to parties outside the client's organization.(n83) This requirement went far beyond what was required then and now.

This congressional interest was arguably responsible for much of the self-regulatory activity undertaken by the accounting profession in recent years. The AICPA expanded its board of directors to include three members from the general public, and the profession through the Financial Accounting Foundation eliminated the requirement that there be a majority of practicing CPAs on the FASB(n84) and established that proposed FASB standards could be adopted by a simple majority.(n85) Several other organizational changes were made, and the profession also undertook "a candid peer review program designed to provide a vehicle for constructive interpractice criticism in the United States and in overseas affiliates as well."(n86)


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