The issues currently being raised about the effectiveness of the accounting  profession’s self-regulatory system are not unique to the collapse of Enron. Other business failures, restatements of financial statements, and the  proliferation of pro forma earnings assertions over the past several years  have called into question the effectiveness of the current system. In addressing these issues, proposals  should consider whether overall the system creates the right incentives,  transparency, and accountability, and operates proactively to protect the  public interest. Specifically, we believe that  the Congress should create an independent statutory federal government  body to oversee financial audits of public companies.
What GAO Found

In the wake of the Enron collapse and the proliferation of earnings restatements and pro forma earnings assertions by other companies, questions are being raised about the soundness of private sector financial reporting, auditor independence, and corporate governance. In addressing these issues, the government's role could range from direct intervention to encouraging non-governmental and private-sector entities to adopt practices that would strengthen public confidence. GAO believes that Congress should consider a holistic approach that takes into account the many players and interrelated issues that brought about the Enron situation.