Date:    08/22/2000  2:40 PM

Subject: S7-13-00

The purpose of this e-mail message is to document my protest of the proposal on 
independence recently issued by the SEC. I believe the proposal is based on 
erroneous conclusions about the impact services other than audits or tax 
preparation have on the independence of CPA firms both in fact and in 
appearance. Further, I believe the proposal will drive up the cost of capital, 
and will cause harm to clients and CPA firms alike.
     
The decision to move forward with this rule prohibiting non-audit services has 
apparently been made without facts or evidence. There appears to be absolutely 
no empirical evidence that non-audit services have compromised audit quality or 
auditor independence, nor ever caused an audit failure. Why create a rule for a 
problem that does not exist?
     
The conclusions of the current Panel on Audit Effectiveness of the Public 
Oversight Board have apparently been ignored. The Panel concluded "both the 
profession and the quality of audits are fundamentally sound."  The Panel said 
it could find no evidence that the provision of non-audit services has hurt 
audit quality. On the contrary, it concluded that in numerous instances 
non-audit services contributed to a more effective audit.
     
In addition to providing services to privately-held entities, my firm audits 
primarily small to medium sized SEC registrants. These registrants look to us to
advise them on application of rules and regulations, to assist them in designing
effective internal controls, among many other matters. To deny these registrants
the opportunity to use their auditors as sounding boards for ideas and advice 
would drive up the cost of capital as they look to other advisors for such 
services. These other advisors, not being familiar with the issues of the 
registrant, will incur start up time and costs that are just not necessary. 
     
Many reistrants fall into this small to medium sized business category. If the 
proposed rule is made effective, I believe many CPA firms will simply chose to 
stop serving these businesses as auditors, and will focus on tax and other 
advisory services. This will also drive up the capital, as it is likely only the
"Big 5" will remain as viable auditors of SEC registrants. 
     
Before finalizing this proposal, please consider the impact it will have on the 
thousands of small to medium sized registrants, and the likely impact it will 
have on entities that are not registrants as other regulators look to the 
revised regulations to craft their own standards. 
     
I also believe this can only hurt the CPA profession as the scope of services 
offered by firms is restricted. Many will chose to simply discontinue doing 
audit work if the proposal is adopted as a regulation. As the number of firm 
willing to perform audits dwindles, competition will drive up the cost of 
audits, causing harm to clients. CPA firms will also be hurt, as they will not 
be able to attract the best and brightest students, many of whom currently look 
to the audit side of the profession as a stepping-stone to consulting and other 
services. They look to the profession as a means to ensure a vibrant, 
challenging career. If audits are all that are provided by a firm, that firm 
will likely not be able to attract the best personnel.
     
Before you decide to finalize this rule, I would ask you reconsider the 
ramifications of the proposed rule. I believe the proposed rule will not serve 
SEC registrants or the investing public as intended.
     
     
Respectfully submitted,
     
Neal West