CalPERS Hatches Accounting Reform Agenda

The pension system’s investment committee added a number of staff recommendations to the reform agenda announced last week that detailed its decision to use its shareholder clout to block auditors from acting as consultants.

The recommendations include:

• allowing audit committees full access to company records
• requiring that the committees have access to their own resources subject only to overall budgetary control by an independent board.

CalPERS also said audit committees should:

• meet at least once per quarter
• review the firm’s internal audit functions at least annually
• meet with the external auditor at least once annually, at a meeting that does not include any company employees.

It also acknowledged that its fight for improved corporate governance has not gone far enough, as evidenced by the collapse of the defunct energy trader.

The retirement system, which actually made money out of the fiasco thanks to a partnership with Enron known as JEDI I, has been criticized for failing to alert investors early enough about the potential conflicts of interest in Enron’s partnerships, which were at the center of the energy giant’s bankruptcy filings.