Footnotes through the accounting and consulting profession

Conflicts in audit committees are common. More than 25% of 207 publicly traded companies that filed for bankruptcy protection in 2001 either did not have an audit committee or did not disclose its members; had current or recently departed company executives on their committees; or had other links

- including two cases in which a former employee of the auditor was chairman of the audit committee - that raise questions about the panel's independence. More than one in six disclosed that a high-ranking corporate executive had formerly worked at the company's audit firm. (That number could be much greater, but regulatory filings with the SEC often provide employment history only for the past five years.) In a dozen of the cases, the audit committees never met, even as the companies were going bust. (Analysis by the Chicago Tribune.)

A trend or politically correct stance? Disney and Lucent are on record that they will not engage their auditor firm for consulting services. Both are PricewaterhouseCoopers audit clients. PwC already is committed to spinning off its consulting practice. (In 2001, Disney paid PwC $8.6 million in audit fees, $23.2 million in nonaudit-fees. Lucent was invoiced $7.6 million in audit fees, $8.3 million in financial information fees and $55 million on other fees.)