Accounting Reform After Enron: Issues in the 108th Congress

Publication Date: May 2003

Publisher: Library of Congress. Congressional Research Service

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Research Area: Law and ethics

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Abstract:

The sudden collapse of Enron Corporation in late 2001, amid revelations that its public accounting statements had been manipulated and falsified to conceal the company's true financial position, was the first in a series of major accounting scandals involving American corporations. The response of the 107th Congress was to pass the Sarbanes-Oxley Act (P.L. 107-204), sometimes described as the most sweeping amendments to the securities laws since the 1930s. (For a summary of Sarbanes-Oxley, see CRS Report RL31879.) The 108th Congress is unlikely to consider legislation as far-reaching as SarbanesOxley, but several issues related to accounting reform remain. These include questions of accounting for stock options and financial derivatives contracts, the possibility of replacing our current rules-based accounting system with a principles-based system, and oversight of the implementation of the accounting reforms mandated by the SarbanesOxley Act. This report will be updated as events warrant.