September 25, 2000
Mr. Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609
Re: File No. S7-13-00
Dear Mr. Katz,
Summit Bancorp ("Summit") appreciates the opportunity to submit its comments on the proposed rule amendments regarding auditor independence. Summit is a regional bank holding company listed on the New York Stock Exchange and headquartered in Princeton, New Jersey with $39 billion in assets and $26 billion in deposits.
Summit is an advocate of high quality financial reporting and believes in the relationship between independent auditors and public trust. However, limiting the types of services that are a real benefit to SEC registrants under the proposed auditor independence rules would negatively impact the banking industry and the public in general.
Our independent auditors have developed insight into Summit's operation that has proven to be invaluable to Summit and its customers and investors by assisting us to accomplish our objectives of accelerating the pace of top line revenue growth; diversifying revenues and increasing fee-based income; and maintaining an expense discipline that currently places our efficiency ratio among the nations best banks. Our independent auditors were able to assist us by providing valuable non-audit services. Restrictions on non-audit services would result in increased costs of audit services as well as increased costs due to a duplication of efforts that would have to be conducted by auditors if they were not performing the non-audit services. These increased costs would most likely be passed on to the consumer in the form of higher fees for services and products.
We do not always select the firm that performs the audit when seeking outside consulting services. We hire the firm that we believe can add the most value. Management should have the freedom and ability to seek out and hire the professional firm that can best provide the requested services whether these services are related to our processes and procedures or to an acquisition.
It is my understanding that this proposal is in direct contrast to the recommendations of the Panel on Audit Effectiveness of the Public Oversight Board, which was formed at the request of the SEC. The panel found no evidence that the provision of non-audit services has negatively impacted audit quality and concluded that in numerous instances non-audit services contributed to a more effective audit. In light of this, I urge you to evaluate the far-reaching impact this proposal will have and allow time for important recent reforms to work, including the new disclosure and audit committee requirements adopted by the ISB, the NYSE, the NASD, the American Stock Exchange, and the SEC. I urge the SEC to hold additional discussions with various industry groups to better understand the risks involved prior to finalizing such rule.
Thank you for the opportunity to comment on this proposal. Should there be any questions about our comments, please contact me at (609) 987-3213.
Paul V. Stahlin
Paul V. Stahlin