Harvey L. Pitt, chairman of the Securities and Exchange Commission, said the accounting profession must regulate itself by, among other things, "meaningfully disciplining firms or individuals falling short" of professional and ethical standards.

Writing in the Wall Street Journal, Pitt said the accounting profession's self-regulatory work should be subject to the SEC's "rigorous . . . oversight."

Pitt said improvements are needed "to reassure investors and restore their confidence."

Pitt wrote as the SEC investigates of the meltdown of Enron Corp. The giant energy-trading firm sought bankruptcy protection last week after announcing that it had overstated profits by more than half a billion dollars over four years.

Much of the responsibility for overseeing the accounting profession now falls on the American Institute of Certified Public Accountants, a 340,000-member professional society and lobbying organization.

In an examination of accountability in the accounting profession published last week, The Washington Post found that the AICPA disciplined fewer than one in five accountants who had been sanctioned by the SEC for unprofessional conduct over 11 years. When the AICPA concluded that members sanctioned by the SEC had committed violations, it closed aboutfive of every six cases without public disciplinary action, The Post reported.

Instead, the group issued confidential letters instructing the offenders to take remedial steps such as additional training.

The AICPA, a private organization, does not answer to the government, and the most it can do to penalize wrongdoing is expel a member from the organization.

It was unclear how Pitt envisions changing the current system. SEC spokesman Michael Robinson declined to elaborate on Pitt's commentary and said Pitt was not available for an interview.

Over the years, some regulators, politicians and industry leaders have talked about creating a new federally chartered industry organization, with SEC oversight, to police the accounting profession. The government created a similar organization to police stockbrokers, NASD Regulation, which has the power to ban offenders from the securities industry.

Pitt has been criticized for publicly promising to make the SEC less confrontational toward accountants. As a lawyer in private practice, he represented the AICPA and each of the five largest accounting firms.

Pitt "sounds a little like the fox watching the hen roost," Rep. John D. Dingell (D-Mich.), ranking Democrat on the Energy and Commerce Committee, said in an interview last week.

In yesterday's commentary, Pitt said investors "are entitled to the best regulatory system possible, and we can achieve more than we presently do if we focus attention on finding solutions instead of scapegoats."

The AICPA board is planning to review the profession's system of self-regulation when it meets tomorrow and Friday, AICPA spokesman Geoff Pickard said.

Leaders of the five largest accounting firms issued a statement last week saying "we know that changes are needed" and "will work to make the right improvements in a timely way."

-- By David S. Hilzenrath