Letter From the Chief Accountant:
May 1, 2000
Dear Mr. Conway:
We appreciate and support the steps being taken by the SEC Practice Section ("SECPS" or "Section") and its members to require and implement controls consistent with the December 9, 1999 letter from the staff of the Securities and Exchange Commission (the "staff"). We look forward to the reports of the SECPS and Public Oversight Board on the progress of the Section’s efforts in this important area.
As I have discussed with Susan Coffey, we would also like to make you aware of a growing number of additional independence issues that have come to our attention since our previous letter. These issues involve additional areas of non-compliance with the independence rules of the profession and/or the SEC. Accordingly, we request that as the SECPS and its members are adopting and implementing new control procedures, SECPS member firms review and where necessary improve their policies and controls to ensure that their firm and foreign affiliates are in compliance with all the independence rules including the following specific independence guidance as it relates to domestic registrants (including their foreign operations) or to foreign private issuers:
The SEC staff strongly supports Independence Standards Board No. 1, Independence Discussions with Audit Committees, and believes that violations of the independence rules noted above should generally be reported to the audit committee. In addition, your members should be aware that Item 509 of Regulation S-K requires disclosure of direct or indirect financial interests of experts, including accountants, named in a filing.
Please call John Morrissey or Scott Bayless at (202) 942-4400 if you have any further questions regarding this letter.