Witt, Mares & Company, PLC
January 11, 2003
Mr. Jonathan G. Katz, Secretary
Re: File Number S7-49-02
Dear Mr. Katz:
Witt, Mares & Company, PLC appreciates the opportunity to comment on the Commission's Proposal Rule: Strengthening the Commission's Requirements Regarding Auditor Independence contained in its recent Release No. 33-8154.
We applaud your efforts to effectively strengthen auditor independence rules with the overall objective of restoring investor confidence in financial reporting and the capital markets. We wish to address our concerns with certain elements of the proposed rule.
We consider the proposed partner rotation requirements to be excessive regarding the five-year "time off" period and the extension of the statutory requirements beyond the engagement and concurring review partners. This requirement can result in the loss of practical knowledge of potential audit risks gained through continuing client service and experience, thus having a negative impact on audit quality. It is our view that the adoption of the proposed rules will force smaller firms to no longer represent public companies and eliminate SEC practice engagements. This creates the undesirable result of significantly reducing the availability of qualified firms to serve as the independent auditors for publicly traded companies. Limiting competition to provide audit services may have a detrimental effect upon overall audit quality.
We will be pleased to discuss our comments or respond to questions you may have. Please contact Mr. Thomas R. Brooks, CPA, Director of Audit & Attest Services at (757) 873-1587 or firstname.lastname@example.org