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U.S. Securities and Exchange Commission

Office of the Chief Accountant:
Regarding Auditor Independence
Letter to Century Business Services

OFFICE OF THE
CHIEF ACCOUNTANT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

November 2, 1998

Mr. Michael Gleespen
Century Business Services Inc.
6480 Rockside Woods Boulevard South, Suite 330
Cleveland, Ohio 44131

Dear Mr. Gleespen:

It has come to the staff's attention that your affiliation with certain accounting firms that practice before the Commission may subject you to the application of the independence rules set forth in Rule 2-01 of Regulation S-X.

At the request of the SEC staff, the Independence Standards Board ("ISB") has undertaken the issue of alternative firm structures which may address your particular facts and circumstances However, pending a decision by the ISB, any accounting firm and the acquirer ("acquirer") of that accounting firm that employs any accountants that work on SEC clients of the accounting firm should continue to fully comply with the SEC's independence requirements. Further, both the accounting firm and acquirer should ascertain that adequate systems of quality control are in place to ensure compliance with Generally Accepted Auditing Standards, including but not limited to independence.

Rule 2-01(b) of Regulation S-X states the term "member" means (i) all partners, shareholders, and other principals in the firm, (ii) any professional employee involved in providing any professional service to the person, its parents, subsidiaries, or other affiliates, and (iii) any professional employee having managerial responsibilities and located in [the engagement office] or other office of the firm which participates in a significant portion of the audit. The independence requirements set forth in Rule 2-01 apply to ail accountants associated with financial statements filed with the Commission.

In determining whether an accountant may in fact be not independent with respect to a particular person, the Commission will give appropriate consideration to all relevant circumstances, including evidence bearing on all relationships between the accountant and that person or any affiliate thereof and will not confine itself to the relationships existing in connection with the filing of reports with the Commission. See Rule 2-01 (c) You should be aware that the Commission, in applying the independence requirements, may deem a "person who, directly or indirectly, controls" a member to be a member under Rule 2-01. See section 20(a) of the Securities Exchange Act of 1934.

The staff is aware that certain states have set forth specific requirements addressing alternative firm structures. The staff is also aware that the American Institute of Certified Public Accountant's ("AICPA's") Professional Ethics Executive Committee has issued a draft proposal addressing these structures. You are advised that neither the Commission nor its staff has stated any position with respect to the guidance set forth by any state or the AICPA.

If you have any questions with respect to your particular facts and circumstances, pending an ISB decision, I strongly encourage you to contact Scott Bayless of my office to set up a meeting to discuss these issues with you.

Sincerely,

Lynn E. Turner
Chief Accountant

http://www.sec.gov/info/accountants/noaction/aacenbus.htm


Modified:01/18/2001