The US Senate has unanimously approved a law enacting tough controls on the accounting profession, in the teeth of opposition from both the House of Representatives and the White House.

The law, proposed by Maryland Democrat Paul Sarbanes, was backed by 97 votes to nil.

The new legislation will create an oversight board for auditors on which the only professional accountants would be retired.

It will be empowered to set accounting standards, fine and ban any individual or firm breaching them, and would also bar auditing firms from much of the lucrative consultancy work for which auditing can be little more than a loss leader.

"We're facing a serious crisis," Senator Sarbanes warned on NBC TV early on Monday.

Tough talk

The head of steam building up behind the Sarbanes bill may well see it survive the bickering likely when it is combined with much more lenient House legislation passed in April this year.

The Sarbanes bill goes way beyond Harvey Pitt's proposal

President George W Bush has said he wants a bill he can sign before Congress goes on holiday in August, and despite White House misgivings about the force of the bill any move to veto it would be disastrous from a PR point of view.

It suffered a small setback early on Monday evening when an amendment pushing for companies to treat stock options as expenses rather than leaving them off the balance sheet - as has been standard practice - was defeated.

Democratic Senator Carl Levin wanted the amendment because, as he pointed out, the papering over of stock options in earnings reports "is part of the reason for the soup that we're in right now".

But Republican Senator Phil Gramm - whose wife was a senior executive in Enron - blocked a vote on the grounds that Mr Levin's amendment mandated an unrealistic timescale.

The use of parliamentary manoeuvres incurred ire from Democrats.

"I think this process stinks," said Senator Byron Dorgan, who had his own amendment on transparency in executive bonuses to worry about.

Counter-proposals

The rigour of the Sarbanes proposals goes beyond what President George Bush's White House or the regulator, the Securities and Exchange Commission (SEC), has been prepared to countenance.

The SEC's chairman, Harvey Pitt, has accelerated proposals shaped post-Enron last year to institute a new oversight of the accountancy business.

The Sarbanes bill goes way beyond Harvey Pitt's proposal

On the table is a nine-person "Public Accountability Board", only three of whose members will be accountants, with the power to fine and censure transgressors.

But several congressmen want Mr Pitt's resignation, on the grounds that during his career as a Wall Street lawyer before being selected for the SEC by President Bush he worked for all the big accounting firms and many of the companies now under scrutiny for accounting problems.

The SEC is meant to have five commissioners including Mr Pitt, but two seats have been vacant for some time while the two remaining commissioners are filled by temporary candidates.

The Senate has now set dates for hearings on the nominees, one Republican - known for his pro-business leanings - and one Democrat.