Robert S. Moore
7706 Strathmoore Road
Dublin, OH 43016
September 20, 2000
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Re: File No. S7-13-00
Revision of the Commission's Auditor Independence Requirements
Dear Secretary Katz:
Please consider this letter in support of the changes the Commission is proposing for auditor independence. This initiative, aimed at improving and modernizing the public accounting profession, is long overdue.
My years of experience have taught me that two of the most important qualities in our profession are reliability and integrity. I have also learned that perception is often times as important as reality. The work done by public accountants must be both independent and perceived by investors and others in the public arena as independent. Anything that compromises that position should not be tolerated as our financial markets, indeed our entire business community, rely totally on this position to function.
Like many who providing testimony to the Commission, I believe auditor independence can only be best achieved by curbing the proliferation of non-audit services provided by a public accounting firm to its audit clients. I think an outright ban on these non-audit services is the only way to guarantee compliance. There are plenty of non-audit clients that audit firms can pursue to provide their non-audit services.
Many non-audit services impair independence. Certainly any outsourcing of the internal audit function to the organization's external auditing firm impairs independence. But we must also look deeper and review the services that are not so obvious in their ability to impair independence. Services such as financial information systems design and implementation, appraisal or valuation services, actuarial services, human resources and many management functions must also be reviewed. Auditors cannot function as a part of client management and remain independent. It is human nature, especially when fees are involved.
Now is the time to strengthen and modernize our profession and the proposed SEC rule amendments regarding auditor independence do just that. I urge you to go forward with these needed changes.
Thank you and all the Commissioners, I look forward to working under the new guidelines.
Robert S. Moore