Nichols, Rise & Certified Public Accountants and Consultants
Member of AICPA
September 21, 2000
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549-0609
Re: File No. S7-13-00
Dear Mr. Katz:
We OPPOSE the scope of services portion of the proposed regulation referenced above, which could ultimately prohibit all accounting firms from providing non-audit services to any of their audit clients. These services valued by our audit clients include, but are not limited to the following:
Currently, this is proposed only for firms with SEC registrants, however we believe that banks, bonding companies and other regulators may regard this move as a precedent for the industry.
We OPPOSE the proposed regulation because it is unnecessary. We concur with the Panel on Audit Effectiveness of the Public Oversight Board - formed at the request of the SEC - that the provision of these non-audit services does NOT hurt audit quality. There is no evidence to indicate that non-audit services have compromised an audit or caused an audit to fail. It appears that your proposed regulation is an advance measure to influence what may be possible perceptions of independence issues in the public's eye.
We OPPOSE the proposed regulation because it will ultimately hurt the auditing profession and increase costs to our clients based on the following:
We OPPOSE the proposed regulation because it is radical and rushed. Your limited comment period and timing of submission does not allow for oversight by Congress or meaningful public participation. There are important reforms in place, recently adopted by the ISB, NYSE, NASD, American Stock Exchange and yourselves, the SEC, which have not been given the time to function and be tested. We all need more time for fact finding and analysis. Regulations, which could result in radical restructuring of the entire accounting profession, cannot be rushed.
This scope of services rule must not be allowed to go forward. We are contacting the congressional representatives of our clients urging them to support this opposition.
NICHOLS, RISE & COMPANY, L.L.P.
Richard L. Stinger, Managing Partner