<p>The Baltimore Sun June 5, 2002 Wednesday <p>June 5, 2002 Wednesday FINAL Edition <p>SECTION: TELEGRAPH, Pg. 2A SUN JOURNAL <p>HEADLINE: A slow path to audit reform; Politics: Some say Maryland Sen. Paul S. Sarbanes is moving too slowly to protect investors in the wake of the Enron scandal. To others, his painstaking approach is just the ticket. <p>BYLINE: Karen Hosler <p>WASHINGTON - As the congressional election year opened in January, Sen. Paul S. Sarbanes found himself thrust onto center stage of the nation's top political and business drama - the collapse of Enron. <p>Enron provided Democrats with a potential campaign issue to use against Republicans, giving them fresh ammunition for their charge that the GOP is too cozy with corporate America. Newly minted Democratic Senate committee chairmen such as Sarbanes, who had taken over the banking panel six months earlier, were handed a mandate to lead the charge by pressing for investor protections that voters appeared to demand. <p>But with Congress reaching the peak of its season, the Maryland Democrat, who shuns the spotlight with the same determination that most senators seek it out, has yet to come forward with a measure that his party can tout as a significant response to the scandal. <p>He resisted calls to strike quickly while the debate over apparent conflicts in auditing firm Arthur Andersen's relationship with Enron was still fresh. Now that the political focus has shifted, Sarbanes is still toiling mostly behind closed doors to form a bipartisan consensus on accounting reforms, which seems unlikely to produce more than modest changes. <p>Some committee Democrats complain privately that Sarbanes' painstaking method - 10 public hearings, then release of a draft bill written mostly without their consultation - wasted valuable time. Privately, the senators joined consumer advocates in contending that Sarbanes' deliberate pace plays into the hands of Republicans, who generally are not eager to pass new ethics rules for accountants that they believe are better set by the industry. <p>"The more delay there is, the better it is for the opponents," says Frank Torres, a lobbyist for Consumers Union, who fears time will run out before Congress can enact tough reforms. <p>Other lawmakers say that rushing to hold news conferences and introduce bills might have short-term political appeal but does not necessarily result in legislation that serves the public - or that can be enacted. <p>"I appreciate the approach he's taking," says Sen. Thomas R. Carper, a Delaware Democrat who says he would support a draft bill circulated by Sarbanes but considers it a work in progress. "The worst thing we could have done is to rush to judgment when the TV lights were hot and the passions were running high, to try to cobble something together and pass it for the sake of passing it. The measured, deliverable approach, the thoughtful approach, really defines the kind of legislator that Paul Sarbanes is." <p>Sarbanes has refused requests from reporters to discuss his work on the accounting legislation while negotiations are under way. But he's made clear to colleagues that he hopes to steer a bill through his committee this month, potentially earning it a place on the floor schedule before the August recess. <p>Prospects are iffy at best. Sarbanes has a one-vote Democratic majority on his Banking, Housing and Urban Affairs Committee, and at least one Democrat - Sen. Evan Bayh of Indiana - says he wants more time to study the draft. <p>Committee Republicans, particularly senior GOP member Phil Gramm of Texas, say they'll do whatever they can to block legislation that they believe attempts to micromanage the accounting industry. <p>Sarbanes had to cancel a committee voting session on the bill last month after 123 amendments, mostly from Republicans, were offered two working days before the session. <p>"It was a sign that there were a lot of contentious issues yet to be decided," Gramm says. <p>It was certainly a hint of what might be expected if Sarbanes brings to the Senate floor a bill that lacked significant GOP support to fend off a filibuster. <p>There is broad agreement in Congress that some action is needed to restore public confidence in the accounting industry, which has been badly shaken by Andersen's dealings with Enron. <p>The accounting firm's failure to blow the whistle on questionable bookkeeping by Enron before the energy giant went bankrupt in December has led to allegations that Andersen was influenced by the fat fees it was receiving from the company for other services. <p>A key point in the legislative dispute is how far Congress should go in dictating whether accountants who audit publicly traded companies can provide those firms with other financial services, such as tax advice, investment strategy or designing information systems. <p>The Republican-led House voted overwhelmingly in April to approve a measure that would bar accountants from performing both in-house audits and audits released to investors for the same firm. Authority to set further rules would be given to a newly created oversight board. <p>Gramm, who is backing a Senate proposal similar to the House bill, says he doesn't believe Congress has the expertise to write accounting regulations. <p>"This isn't about slapping around a few accountants," Gramm says. "This is about the financial underpinnings of our economy." <p>By contrast, Sarbanes' draft proposal lists nine specific functions that accountants could no longer perform for their public audit clients, including the financial consulting services that raised questions in the Andersen-Enron case. He would also create an oversight board to police the auditors and ensure compliance with the new rules. <p>Democrats have long since given up hope that the Enron-Andersen mess would provide them with a political bonanza. Most of the Congress has accepted political contributions from one or both of the firms, and many Democrats, including Sarbanes, raised concerns about an earlier Securities and Exchange Commission attempt to imposed tighter regulations on accountants. <p>President Bush, who has ties to former Enron Chairman Kenneth L. Lay, moved quickly to inoculate himself early this year by proposing investor protections for retirement savings that passed the House but are bogged down in the Democrat-controlled Senate. <p>Even so, the collapse of Enron retains powerful symbolic value that Democrats can use to remind voters of Republican support for big business, such as a tax cut proposal that would have saved millions for Enron, says Jim Jordan, of the Democratic Senatorial Campaign Committee. <p>Some Democratic committee chairmen - notably Connecticut Sen. Joseph I. Lieberman, who might challenge Bush in 2004 - have been aggressive in trying to exploit that message for political advantage. While Sarbanes' reticence has frustrated some Senate Democrats, it has enhanced his relationship with committee Republicans. <p>"We're still approaching it from a collaborative standpoint," says Wyoming Republican Michael B. Enzi, an accountant and Gramm ally who is negotiating with Sarbanes to produce a bill that can win committee support. <p>If that happens, even late in the congressional session, Enzi said, timing won't be a problem. "Anything we're able to work out goes through kind of quickly."