September 5, 2000
Commissioner Laura S. Unger
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Dear Ms. Unger;
I am concerned with the proposed regulation being initiated by the SEC that would adversely impact the services I perform as an independent certified public accountant. These services include but are not limited to auditing services. I am opposed to the proposed regulation because:
- The SEC sets standards that are adopted by other regulators such as state boards of accountancy, U.S. Department of Labor for ERISA audits, and federal and state bank regulators. Although I do not perform audits regulated by the SEC, I am performing audits for ERISA plans, HUD, and credit unions.
- The SEC is proposing to prohibit auditors from performing non-audit services without facts or evidence to defend this position. Why does providing other services impair independence or the audit process? We have found that it enhances our understanding of the client and actually provides a better assessment of the audit risks and therefore better audit services. The SEC requested the formation of a panel: Panel on Audit Effectiveness of the Public Oversight Board. The panel concluded that, "both the profession and the quality of audits are fundamentally sound." The panel said it could find no evidence that the provision of non-audit services has hurt audit quality. On the contrary, it concluded that in numerous instances non-audit services contributed to a more effective audit.
- How will we attract the best students when audit professionals would be restricted from 25%-40% of the market? The other areas of service accounting and auditing professionals provide are the proven training grounds of the upcoming professionals. Similarly, the best and brightest students will not be drawn to firms with a limit on upward opportunities. The "audit-only" firms endorsed by the proposal will have difficulty attracting the necessary talent both from accounting programs and from information technology programs, because the best talent will be drawn toward industries with broader career opportunities.
- The SEC would be restricting the freedom of choice when companies seek outside professional services. Also, restricting CPA firms' opportunities in providing the best accounting services they can; even to potentially prohibiting CPAs from representing audit clients before the IRS. What a curious public policy, contrary to our basic rights.
- We as certified public accountants have provided an effective public service for a century. We have complied with disclosure requirements and other requests made over the years to provide standards of professionalism the public relies on. How can the SEC propose to restructure the entire accounting profession without further analysis, thought and due process?
This scope of services rule must not be allowed to go forward.
Very truly yours,
Corinne Pleger, CPA