RE: Securities and Exchange Commission Proposed Rule on Auditor Indepedence
Reference File No: S7-13-00
We are writing to voice our opposition to the Securities and Exchange Commission's (SEC) proposed rule regarding auditor independence. This rule, if adopted, would prohibit auditors from offering non-audit type services to their clients. If passed, the rule would make many firms almost entirely dependent on audit fees (especially the largest firms) and would most certainly harm auditor independence.
According to the Ohio Society of CPA's the SEC has based its decision to move forward with this ruling without facts or evidence to support it. Even the SEC admits there is no evidence that non-audit services have compromised the quality of audits or auditor independence, nor ever caused an audit failure.
As a CPA firm that does not perform SEC work, we are very concerned that the proposed rule would adversely change the entire accounting profession. Rules such as this often set precedent for other regulators. The proposed rule would probably be viewed as a model for state boards of accountancy as well as federal regulators.
As Americans and CPAs, it disturbs us to see a "power struggle" between the AICPA and the SEC result in such a poor decision by a government agency to "regulate" what services independent certified public accountants can offer without any basis in fact to support the rule. Furthermore, three years ago, at the initiative of the SEC, the Independence Standards Board (ISB) was established to develop a new conceptual framework for auditor independence and to implement appropriate standards. Now the SEC is circumventing the ISB and attempting to "sneak" in a rule that is detrimental to American business and investors.
The Auditor Independence Rule must not be allowed to go forward.
Rodney L. Stoller, CPA
William H. Laukhuf, CPA CFP
Michael L. Arend, CPA
Gregg L. Bashore, CPA
Matthew F. Reineck, CPA