August 22, 2000
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Our firm has a staff of twenty-eight and our business is approximately 45% audit work. We are members of the SEC Practice Section, although we do no SEC work. We were one of the first firms to join in the peer review process in 1978. It is the belief in our firm that the SEC rule would be a benefit in increasing the public trust in certified audits.
It is my opinion that the AICPA has been slow in addressing the issue of auditor independence, while the Big Five have eroded away public confidence by engaging in practices which, although may not have impaired their independence, at the very least gave the perception of a lack of independence.
We are issued certificates to practice public accounting. In Florida, the law prohibits anyone not licensed as a certified public accountant from providing the attest function in the preparation of financial statements. There is no restriction on who can prepare tax returns, do estate planning, business consulting etc..
It is my opinion that the general public would be better served if Certified Public Accountants providing the attest function for a client were unable to do any other consulting work for that client, with the exception for the ability to prepare tax returns.
I am not surprised that the SEC has proposed a rule to curtail what is seen as a public erosion of trust do to the perceived lack of independence by certain auditing firms. I applaud them for it.
Cuthill & Eddy LLP
Carson L Eddy CPA
Cc: Members of Congress