Conway, Deuth & Schmiesing, PLLP
Certified Public Accountants
PO Box 570
Willmar MN 56201
Mr. . Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549-0609
Dear Mr. Katz:
We are writing on behalf of our firm to comment on the proposed SEC rule governing audit independence.
Even though our firm currently does not perform any services for SEC engagements, it is our understanding that these rules would likely be adopted by state boards of accountancy, the Department of Labor and other entities and thus, would have a severe impact financially on our type of firm. We are a regional firm that offers a wide variety of tax, accounting, auditing and consulting services. The proposed rule changes will significantly limit the scope of our practice. Our understanding is that if we have an audit client, we would not be able to perform any other services for that client or our independence would be considered to be impaired.
There are many consulting services provided to clients whereby we are giving advice and it is up to the client to accept and act upon that advice (ie, representing the client before the IRS). Or we may perform an administrative function strictly at the direction of the client (ie, payroll, 401k plan administration, typing, bookkeeping etc.) In either case, we are not acting in a management function or authorizing a transaction and we do not feel our independence is impaired.
Specifically, some of our concerns are:
No Compelling Evidence
The SEC is acting without evidence indicating that non-audit services actually compromise audit quality or auditor independence. Our understanding is that neither the SEC, nor the panel appointed by the Public Oversight Board at the SEC's request, have found evidence that providing non-audit services impaired audit quality. In fact, the panel discovered that, in some cases, non-audit services improved audit quality.
Negative Impact on Firm
Because of the nature of our practice and the area we serve, the imposition of this rule could significantly impact the financial health of our firm. We feel it is essential to consider carefully a proposal that would disrupt effective relationships between audit firms and their clients.
Brief comment period
The comment period was limited to 75 days for something that seems very complex and having a high-impact on the accounting profession as a whole.
In conclusion, this proposal to restrict services offered by accounting firms represents a restructuring of a profession that has successfully provided reliable, independent data over the past century. A decision by a government agency to tell a business organization what services they may offer seems wrong without any empirical or other basis.
The scope of this rule must not be allowed to go forward.
CONWAY, DEUTH & SCHMIESING, PLLP
Rick E. Conway, CPA, Partner
Roger A. Deuth, CPA, Partner
Milan C. Schmiesing, CPA, Partner
Mark R. Olson, CPA, Partner
Brett N. Aamot, CPA, Partner
Larry E. Stulen, CPA, Partner
James A. Gilman, CPA, Partner
Annette R. Benson, CPA, Partner
Larry R. Wepplo, CPA, Manager
James J. Rudnick, CPA, Sr. Accountant
Christina Woltjer, CPA
Jill R. Hedman, CPA, Sr. Accountant
Darrin D. Ogdahl, CPA, Sr. Accountant
Robin A. McCormack, CPA, Sr. Accountant
Patty K. Grube, CPA
Carter A. Moser, CPA