Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549-0609
Dear Mr. Katz:
Our firm is a member of the SECPS of the AICPA. I have been in public practice of accounting since 1976. Our firm employs approximately twenty-five persons with ten CPAs working fifty percent of the firm capacity in the client audit service area. I have been a member of PCPS and/or SECPS since approximately 1988. We have participated in the peer review program from its inception and we have always received a clean opinion without letters of comment that is the highest report available. I have also spent six years on the Georgia Society of CPA's (GSCPA) Peer Review Committee, three of those as chairman, as well as three years on the GSCPA Peer Review Executive Committee. I believe these areas of involvement in the development of the profession support my ability to speak on behalf of my profession as a Certified Public Accountant. Our firm has two SEC clients (not publicly traded) with approximately 1,000 hours devoted to these clients out of approximately 30,000 hours of client service.
I am a supporter of this profession and the strength and integrity of the members of the profession. I know we need regulation to provide guidance where no guidance is provided, but this is regulation appears to be directed to some few members of the profession who use the audit function as a lead into more profitable management service contracts.
The SEC rules proposed to control auditor's financial interest in their clients and audit firm's provision of non-audit services are two different issues and are too complex to be addressed by the SEC and the profession in your limited comment period to end September 25, 2000. The time period for exposure and comment is too short to properly address these complex issues.
The rules you propose may be developed to address multi-million dollar corporations and their auditors, however, the trickle down effect of these rules to other regulatory bodies as they are adopted formally or informally through association will have a devastating effect on my firm and the twenty five people who now work here. We do not need new rules. We need the profession and public to place into action and use the rules of the profession already in effect. The current independence and ethics rules of the profession are adequate.
I practice in a community of approximately 40,000 people and I can tell you that we do not have a problem in ownership of clients stock or lack of independence through other service areas of practice with the size clients that I serve. The services of a small CPA firm are required to be diverse to allow us to serve client needs and to employ professional persons who want to practice this profession in a small diverse market. Sometimes the auditor is the person who knows more about the client's system, system needs and system deficiencies than anyone in the client's service network. The services available from a CPA firm such as: the services of design and implementation of financial information systems, agreed upon procedures, valuation services, management consulting, contracted services for special projects, human resources, financial planning, investment and internal audit are areas of services which we must have available in our tool box for services to our audit and non-audit clients to survive in this profession as a valid business unit.
I hope the profession is not headed toward removing much needed services from small clients. Small clients cannot afford the cost associated with specialization at the level of practice that will be necessitated by adoption of new rules. Also, as it always seems, small firms and small clients are the ones damaged the most when official action is prescribed by national organizations. The adoption of these proposed new rules will ultimately affect all CPAs, the profession, and the clients we serve-negatively. I will appreciate you making this response a part of the official response period.
/s/Frank W. Seaton, Jr., CPA