Subject: Comment Letter Re: File No. S7-16-98
 
Date:    8/18/98 1:37 PM
     
     
     
     
Reminick, Aarons & Company, LLP
     
Certified Public Accountants
685 Third Avenue,  New York, NY 10017-4037 
     
     
August 13, 1998  
Mr. Jonathan G. Katz  
Secretary
Securities and Exchange Commission  
450 5th Street, N.W.  
Washington, DC 20549-6009  
                                        Re: Commission File No. S7-16-98
     
     
Dear Mr. Katz:  
     
This letter is to provide comments with respect to the Securities and 
Exchange Commission's (SEC) proposed amendment to define "improper 
professional conduct" as it appears in Rule 102(e) of the SEC's Rules of 
Practice.  The Commission's proposed rule defining improper professional 
conduct is contained on the SEC's Internet site, SEC.gov, as follows:  
     
                (A)     An intentional or knowing violation, including a
reckless violation, of applicable professional standards; or  
                (B)     Negligent conduct in the following
circumstances:  
                                (1)     An unreasonable violation of
applicable professional standards that presents a substantial risk, 
which is either known or should have been known, of making a document 
prepared pursuant to the federal securities laws materially misleading; 
or  
                                (2)     Repeated, unreasonable
violations of applicable professional standards that demonstrate that 
the accountant lacks competence.  
     
The American Institute of Certified Public Accountants (AICPA) has 
distributed to SEC Practice Section (SECPS) member firms a copy of a 
letter from Richard I. Miller, AICPA General Counsel, to the AICPA's 
Business and Industry and SECPS Executive Committees that addresses this 
matter.  That letter articulates an AICPA Rulemaking Petition submitted 
to the Commission on May 7, 1998 (SEC File No. 4-410).  I fully support 
this AICPA Rulemaking Petition and Mr. Miller's letter.  
     
In my view, the Commission's proposed rule does not clarify the meaning 
of "improper professional conduct" by an accountant.  In addition to the 
points made in Mr. Miller's letter, referred to in the preceding 
paragraph, the term "unreasonable violation of applicable professional 
standards" is not clear.  Does this refer to a failure to properly apply 
or interpret professional standards?  If so, such a rule would seem 
unreasonable because it fails to allow for honest differences of opinion 
or judgement.  That point is addressed in Mr. Miller's letter.  
     
Generally Accepted Auditing Standards (GAAS) contain a requirement that 
an accountant exercise due professional care in the performance of his 
or her work.  GAAS also requires that audits be performed "...by a 
person or persons having adequate technical training and proficiency as 
an auditor."  Thus, existing professional standards, which have been 
tested in numerous judicial proceedings, already address the issues of 
negligence and competence.  With that in mind, it seems that the 
Commission would accomplish its goal by simply requiring that existing 
professional standards be followed.  Therefore, I see no need for 
"clarification" beyond a requirement to follow existing professional 
standards.  
     
Sincerely,  
     

Robert J. Sonnelitter, Jr.  
Director, Accounting and Auditing  
Reminick, Aarons & Co., LLP