Date:    09/06/2000  8:20 AM

Subject: S7-13-00

I am writing to raise my objections to the SEC's proposed rule to revise 
the Commission's auditor independence requirements.
     
Even though I do not deal with publicly-held clients, the proposed rule 
will more than likely have an adverse effect on our practice and the 
profession as a whole.  I ask you to consider the following points:
     
·       Clients view their accountants as trusted business advisors and 
consultants.  By prohibiting the providing of certain non-audit services to 
audit clients, accountants will be severely limited in their ability to 
serve their clients.  An inefficiency would result since many of the 
services provided are the result of an audit and such services can be used 
as a tool in performing an audit.  Besides reducing an accounting firm's 
revenues, the client will also incur additional expense because of the need 
for two or more audit/accounting firms.
     
·       As yet, there has been no evidence that non-audit services have 
compromised the quality of an audit, the independence of an audit or caused 
an audit failure.  And there is nothing to indicate that an audit was 
ineffective because of providing non-audit services.
     
·       The recent Panel on Audit Effectiveness of the Public Oversight Board 
found no evidence that providing non-audit services has hurt audit quality.
     
·       Effectively banning CPAs from representing audit clients before the IRS 
would not make any sense if the CPA has prepared the tax return.
     
·       CPA firms are already facing a tough enough challenge in recruiting and 
retaining professionals.  If firms are forced to choose between being an
audit or non-audit firm, the negative impact on hiring and keeping staff 
will be magnified.
     
·       In addition to the above, the quality of audits has the potential for 
decline, since the most qualified personnel cannot be hired or retained.
     
·       Independence may become an even bigger issue if a CPA firm becomes 
dependent on audits as its sole source of revenue.
     
·       The proposed rule may be adopted by other regulating bodies (Department 
of Labor, OMB, governments, etc.) which would further hamstring accounting 
firms from servicing their clients.
     
·       When a CPA firm cannot provide a particular non-audit service for a 
client, the use of an affiliate or alliance to help provide the service 
which a client needs/wants is essential.  The client wants that from his 
CPA since he's a trusted business advisor/consultant.
     
Determining independence rules as it relates to "independence in 
appearance" (as opposed to independence in fact) should not be in the scope 
of the SEC's powers.  Be that as it may, the proposed rule will have 
far-reaching effects beyond the public sector.  The business and accounting 
world has changed dramatically over the years.  I don't believe anyone 
disputes the necessity for auditors to be objective.  But the proposed rule 
extends way beyond what is necessary and will ultimately have negative 
consequences for the "non-public" CPA firm and the profession as a whole.
     
Please consider the above and do not pass the proposed rule.
     
     
Robert J. Giblichman, CPA
Partner
Warady & Davis LLP
Deerfield, IL