September 5, 2000
Jonathan G. Katz, Secretary Via Email: firstname.lastname@example.org
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609 Reference file No.: S7-13-00
I am a CPA employed as CFO for The Ramkota Companies, Inc. here in Sioux Falls, South Dakota. I graduated from college in 1974, spent four years in Minneapolis with Deloitte and then two years with a regional CPA firm here in Sioux Falls. While in Minneapolis I worked on SEC public utility engagements and have taught Auditing at Augustana College since 1988.
When I talk with my students about career paths I stress the value of Auditing to society and how as our economy has become more diverse and investments geographically removed from the investor the independence of the auditor is essential. As we look at CPA firms there has been a natural expansion into areas that firms have developed expertise because of the talent they have attracted and the number of clients they have served. As I have observed audit clients and how they address cash flow problems, inventory problems and handle accounting detail my knowledge base increased and I was a resource for my clients. While with a regional firm I developed some expertise in the electric and telephone area and was able to assist clients with rate structures to accomplish their objectives. This is a non-audit area where I was very helpful to my client and do not believe in any way that it affected my independence when performing the audit. This was not an SEC client but a cooperative, but should the SEC proposed rule go through it will be mirrored in state legislatures across the country and ultimately effect how services are provided.
Since the rule is proposed based on no identified problem I would like to offer another scenario as well. It has always been the practice of CPA firms to hire the brightest and the best and this could very well be limited if when recruiting you tell the prospect that they can perform only audit and tax work - no consulting.
I ask that you consider the gravity and magnitude of your proposed rule on independence and develop a better approach to solving the problem that doesn't exist. Perhaps you could give the Independence Standards Board time to complete its efforts and see how that works out. As I look at the strides made in Audit Committees in the past two years I think we can all be hopeful of the results the ISB will have for Auditor Independence.
Thank you for your consideration.
Treasurer and Chief Financial Officer, The Ramkota Companies, Inc.