When the Senate reconvenes this week following a month-long recess, Sen. Barbara Boxer (D-CA) said she plans to introduce legislation that will require auditors to maintain financial independence from their clients. The bill, prompted by questions about Enron Corp.’s close ties to outside auditor Arthur Andersen LLP, specifically would bar accounting firms from providing management consulting services to the companies that they audit.

“The American people have a right to expect that the firms that audit the companies they invest in are free from conflicts of interest. These conflicts have led to the kind of hide-the-debt shell game that took place at Enron,” said Boxer, a former stockbroker who publicly has advocated severe criminal penalties for Enron and Andersen officials.

Boxer, as well as other Capitol Hill lawmakers, believe that the consulting work that Andersen did for Enron created a conflict of interest, and may have prompted the auditing firm to look the other way when reviewing the controversial off-balance sheet partnerships that led to Enron’s downfall. With her legislation, Boxer said she hopes to prevent this in the future.

“In my days as a stockbroker many years ago, the auditor’s stamp of approval was unquestioned. We must get back to that more ethical time,” she noted.

The House Energy and Commerce subcommittee on oversight and investigations has scheduled a hearing for Thursday to focus on the destruction of documents by Arthur Andersen employees who were responsible for the Enron account. David Duncan, the former partner who oversaw Andersen’s audit of Enron in Houston, is expected to testify. He was fired last week by Andersen after it was disclosed that Enron-related documents and records were shredded. Duncan told congressional investigators that documents were destroyed at the request of Andersen’s attorneys.

In addition to the shredding at Andersen, ABC News on Monday reported that Enron employees in Houston had destroyed company documents up through early to mid-January.

The Senate Governmental Affairs Committee also has scheduled a hearing on Thursday into the Enron financial collapse and bankruptcy. The hearing will focus on the flaws in the financial and energy markets that allowed so many investors to be victimized by Enron. A final witness list has not been released yet.

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