Crusades often are well-intentioned adventures that end badly. The current crusade by Arthur Levitt Jr., chairman of the Securities & Exchange Commission, should not be one of them. Levitt wants the Big Five accounting firms to separate their accounting and consulting businesses. But key members of Congress, taking hefty campaign contributions from the Big Five, oppose his reforms. Levitt's success in ending conflicts of interest in the accounting profession is essential to the health of U.S. financial markets. A loss would hurt investors and move the U.S. toward crony capitalism.

For decades, the accounting profession has done one job--provide clean, honest numbers on corporations for investors. Accountants hold what is, in effect, a public trust. With the stock market playing an increasingly important role in the New Economy as generator of global capital, repository of savings for millions of people, and financier of America's huge trade deficit, that trust is needed more than ever.

But it is eroding quickly. Real and apparent conflicts of interest are part of a growing series of accounting scandals. A recent SEC report showed that many of PricewaterhouseCoopers employees, some partners in the firm, owned stock in companies PWC was auditing. What were they thinking? This is a violation of the obvious rule that auditors should not have a financial stake in clients they're evaluating.

A bigger problem lies in the booming consulting business that Levitt is targeting. Through their consulting arms, auditing firms are increasingly in business with the very same companies they are supposed to be independently evaluating. The SEC told MicroStrategy Inc. to restate its earnings, sending the stock down and costing investors billions of dollars, and is investigating whether PWC's consulting work and financial ties to its client compromised its independent audit.

Accounting firms argue that there is no concrete proof that accounting problems are due to conflicts of interest. They have a point. Levitt is providing only anecdotal evidence of the problem. And accounting incompetence goes back to at least the savings-and-loan scandals of the 1980s, when investors sued auditors for not providing true bank figures. But incompetence is hardly a defense. Investors have lost $41 billion in collapsing share prices due to restatements of audited annual financial reports since 1997. Conflict of interest may have played a role in many of the restatements. Who knows?

It is just common sense for all professionals to avoid potential conflicts of interest. If the Big Five accounting firms want to get into the lucrative consulting business, that's fine. But they should then separate it completely from accounting. Levitt is right on this score. In protecting the accountants, Congress is hurting investors and the markets.

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