Paulson called this the first stage of an "action plan" for maintaining the competitiveness of U.S. capital markets.

"A transparent financial reporting system and vibrant auditing profession form the backbone of a marketplace investors can trust," Paulson said.

In a newspaper opinion published earlier in the day, Paulson said there are legitimate questions about the sustainability of the auditing profession's business model as the industry consolidates.

In a later speech, U.S. Treasury undersecretary Robert Steel said the accounting industry review would focus on competition and concentration, the availability of "human capital" and accounting firms' financial resources.

The Treasury plan also includes streamlining accounting requirements to encourage international companies to list on U.S exchanges. There will be a review of financial reporting requirements and the factors driving frequent restatements of company results.

The accounting reform plan is part of the Bush administration's response to complaints from businesses and securities markets that requirements of 2002's Sarbanes-Oxley Act pose excessive accounting burdens and discourage foreign companies from listing in the U.S.

Steel, speaking to the Council on Competitiveness in Washington, said he rejects "a black and white debate of rules versus principles" in regulatory reform.

Noting that the U.S. and U.K. systems both employ principles and rules, he said it is a mischaracterization and oversimplification to draw a "sharp distinction" between the two governments' approaches.