Subject: File No. PCAOB-2014-01
From: Suzanne H. Shatto

July 23, 2014

 i generally support this standard.
   this standard should not be limited to brokers-dealers or even
   financial entities. this rule should be part of the audit standards
   for all financial statements.

   related transactions should be disclosed if they are significant in
   relation to ownership, revenue, expenses, or any other payment.

   i support the requirements to report an unresolved irregularity to the
   audit committee and the SEC, and the procedures to report on the
   financial statements. i am concerned that some brokers do not have to
   file financial statements for public consumption because clients and
   vendors may be impacted by such irregularities in any company
   dissolution or disagreement.

   foreign related entities should be disclosed. transactions that may
   not have a business purpose should invite more scrutiny.

   management representations are not sufficient to resolve irregular

   if management does not disclose related entities and the auditor finds
   evidence of related entities, this is a serious problem that impacts
   any other representations made by management.

   i agree that auditors must qualify their opinion if their inquiries
   were resolved in an unsatisfactory manner.

   i am concerned that brokers may have begun related entities, such as a
   clearinghouse, in order to control the settlement procedures which
   might negatively impact prompt settlement. or maybe brokers, by
   themselves or with other brokers, have begun related enterprises such
   as a custodial entity that is supposed to hold customer assets. or
   maybe brokers might have sold order flow to another entity that shorts
   against the customers orders and keeps the transaction unsettled in
   order to benefit from a decreased price. or perhaps the broker might
   allow a selling broker to keep a transaction open and not provide the
   shares within market deadlines. or maybe a broker might pay foreign
   ownership interests instead of paying balances owed to their clients.
   or maybe brokers have failed to protect client balances owned by the
   client and thus allowed a custodial entity to rent shares. or maybe a
   broker has another entity that receives income from the broker so that
   some officers receive more compensation than is reported by the
   broker. or perhaps a selling broker can "negotiate" a contract that
   allows settlement to be postponed indefinitely by payment of a fee -
   other entities would not be allowed to delay a contract such as
   settlement because it would violate the broker's contract with their
   buying client. such a contract might violate market regulations
   because of the broker's responsibility to their client.

   while auditors may find these procedures difficult, it is the
   financial shenanigans of such a client that requires that auditors
   take these precautions. auditors provide assurances to outside
   entities - the public, regulators, customers, vendors. as such, there
   is a responsibility to describe the character of the company through
   representations made by the auditors. the auditor represents an
   informed unrelated, and hopefully neutral, party that can provide
   assurances on the financial statements.

   as far as effective date of audits, i would disagree. i am aware that
   these changes may cause audit firms to review their procedures and
   this may delay implementation. however, i would like to see all
   december, 2014 audits using these standards, not just december 31,
   2014 audits. some brokers have period ending dates in december that
   are not december 31 and i am especially looking forward to the broker
   audits. i hope that these standards will also apply to all audits, as
   all companies might benefit from public confidence in the audit

   the audit function is important for the public interest. without
   audits, financial statements become merely management representations.
   if auditors cannot show that they implemented these audit standards,
   they are at risk for lawsuit or regulatory action. some auditors have
   already considered the situations described in this rule and
   implemented procedures. this rule merely sets a standard for the
   audits. if auditors don't perform these procedures, they risk loss of
   license and possible loss of their audit company. investors' attorneys
   have begun to hold audit firms accountable.

   it is my opinion that the company's executive officers are the right
   group to examine for related party transactions because some of the
   company's officers will have direct responsibility for the production
   of the financial statements.

   while this rule change will increase the cost of the audit, if there
   are related party transactions or unrelated transactions that do not
   appear to be at arms length, this is the cost imposed by the entity
   that has the conflict of interest or fraud. entities that do not have
   such conflicts of interest will not be significantly impacted by this
   rule change.