The House and Senate have passed legislation aimed at combating fraud by accounting firms and corporate executives. Both chambers approved the measure on July 25—the House vote was 423-3; the Senate's was 99-0. President Bush is expected to sign the bill.

(Photo courtesy of the White House)

The bill establishes a new oversight board for accounting firms, requires chief executive and chief financial officers to formally endorse their companies' financial reports, and bars corporations from using the same accounting firms to do audits and provide consulting services.

(Photo courtesy of the White House)

The legislation applies to publicly traded companies. It would have limited direct impact on engineering and construction, because most of the firms in those industries are privately held. With all the current attention to corporate governance issues, however, some private firms may choose to re-examine their own policies or emulate the measure's provisions in that area.

In the final version of the legislation, conferees adhered closely to the Senate-passed version, whose prime mover was banking committee Chairman Paul Sarbanes (D-Md.). The Sarbanes bill was tougher than the House measure.

But conferees added a provision championed by Rep. Richard Baker (R-La.) to require payment to shareholders of penalties levied against corporate criminals, as well as more stringent criminal penalties.

The lead House conferee, Financial Services Committee Chairman Michael G. Oxley (R-Ohio) said the legislation "will make the capital markets more accountable to investors, increase the transparency that serves as a foundation of our markets and make corporate executives who break the law and abuse the public trust pay severely."