September 22, 2000
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609
Dear Secretary Katz:
Recently, your organization has proposed new independence rules for auditors. The rules that you are proposing are not based in fact or evidence. In addition, the time allowed seems designed to avoid Congressional oversight and preclude meaningful public participation. In so doing, the SEC has:
Not only is the schedule designed in question, I question the authority to make such sweeping changes in the rules for scope of service. The statutory provisions cited by the SEC in the proposed rule pertain to public companies' filing of financial statements that have been audited by independent accountants and do not expressly authorize the SEC to make rules governing or regulating directly the accounting profession itself.
The proposed rule is based primarily, if not entirely, on alleged concerns relating to the "appearance of independence" - but not independence in fact. The SEC does not have statutory authority to impose restrictions because of possible perceptions about independence.
In conclusion, the proposal to restrict the services offered by accounting firms represents a fundamental restructuring of a profession that has successfully given investors the reliable, independent data they need for the past century.
A decision by a government agency to tell some business organizations what services they may offer and to tell other businesses from whom they can buy services is an extraordinary economic intervention without any empirical or other basis. We think most Americans would find this a curious public policy position for their government to take.
I respectfully request your assistance in helping to stop this proposed change.
GAITHER RUTHERFORD & CO., llp
Charles W. Rutherford, CPA