FOR IMMEDIATE RELEASE                                    2001-4

             Levitt Sends Letter to Audit Committees

     Washington, DC, January 5, 2001 - Securities and Exchange
Commission Chairman Arthur Levitt today sent the following letter
to the audit committee chairmen of the top 5,000 public
companies.

     Dear Members of the Audit Committee:
     
     Almost  a  year ago, the Commission, our major  markets
     and  standard setters -- building on the  work  of  the
     Blue  Ribbon Committee on Audit Committee Effectiveness
     --  adopted rules that strengthen the audit committee's
     independence,  and give its members the tools  and  the
     wherewithal  to  fulfill their duty  to  the  investing
     public.  In addition, the rules improve communications,
     through  greater disclosure, among the  board,  outside
     auditors and management.
     
     When  auditors  and  the  board  engage  in  frank  and
     meaningful  discussions  about  the  significant,   but
     sometimes  gray areas of accounting, both the company's
     and  its  shareholders' interests are served.  In  this
     way,   the   board,  including  the  audit   committee,
     management,  and outside auditors form a  "three-legged
     stool" of responsible disclosure and active oversight.
     
     In  recent  months, the Commission and  the  accounting
     profession  have  been engaged in a discussion  on  the
     vital  issue  of  auditor  independence.   Among  other
     reasons,   increased   economic   pressures   on    the
     profession,   coupled  with  greater  competition   and
     consolidation, mandated that we modernize  and  further
     clarify independence requirements.  This discussion has
     led  to  a  combination of rules and  disclosures  that
     establish clear guidelines on the non-audit services an
     auditor may provide to an audit client, as well as  the
     meaningful  involvement  of  the  audit  committee   in
     consideration  of consulting services that  may  impair
     independence.   More  specifically,  the   Commission's
     rules   require  companies  to  state  in  their  proxy
     statement  whether the audit committee  has  considered
     whether  the  provision  of the non-audit  services  is
     compatible with maintaining the auditor's independence.
     
     In  August, the Panel on Audit Effectiveness issued its
     final  report  recommending that, among  other  things,
     audit  committees obtain annual reports from management
     assessing  the company's internal controls, specify  in
     their  charters that the outside auditor is  ultimately
     accountable  to  the  board  of  directors  and   audit
     committee, inquire about time pressures on the auditor,
     and  pre-approve  non-audit services  provided  by  the
     auditor.
     
     The  Panel,  more  specifically, provided  guidance  an
     audit    committee   can   use   to    determine    the
     appropriateness of a service.  This guidance includes:
     
      1. Whether the service is being performed principally
         for the audit committee.

      2. The effects of the service, if any, on audit
         effectiveness or on the quality and timeliness of the
         entity's financial reporting process.

      3. Whether the service would be performed by specialists
         (e.g., technology specialists) who ordinarily also
         provide recurring audit support.

      4. Whether the service would be performed by audit
         personnel, and if so, whether it will enhance their
         knowledge of the entity's business and operations.

      5. Whether the role of those performing the service
         would be inconsistent with the auditors' role (e.g.,
         a role where neutrality, impartiality, and auditor
         skepticism are likely to be subverted).

      6. Whether the audit firm personnel would be assuming a
         management role or creating a mutual or conflicting
         interest with management.

      7. Whether the auditors, in effect, would be "auditing
         their own numbers."

      8. Whether the project must be started and completed
         very quickly.

      9. Whether the audit firm has unique expertise in the
         service.

     10. The size of the fee(s) for the non-audit service(s).
     
     I encourage your audit committee to discuss the Panel's
     recommendations  as  well  as  these  ten  factors  and
     consider   them  in  relevant  discussions  with   your
     auditor.    The  Panel's  report  can   be   found   at
     www.pobauditpanel.org/.  I also encourage you  to  read
     the       Commission's      rule       release       at
     www.sec.gov/rules/final/33-7919.htm.
     
     During my almost eight years at the Commission, I  have
     come to believe that one of the most reliable guardians
     of  the  public  interest  is a  competent,  committed,
     independent  and  tough-minded  audit  committee.   The
     audit  committee  stands to protect  and  preserve  the
     integrity of America's financial reporting process.   I
     encourage your committee to take every step possible to
     ensure  that the integrity of the financial statements,
     and by extension, the interest of shareholders, remains
     second to none.
     
     
                                  Sincerely,
     
     
                                  Arthur Levitt
     
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