Comments on Proposed Rule:
Revision of the Commission's Auditor
Independence Requirements
[Release Nos. 33-7870; 34-42994; 35-27193; IC-24549; IA-1884; File No. S7-13-00]
Author: at Internet
Date: 09/08/2000 2:29 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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RE: File No. S7-13-00
I think your efforts for auditor independence is a valid position and should
be pursued.
Jeremy Drzal
Individual Investor
Author: Al Fiore at Internet
Date: 09/08/2000 3:43 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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Auditing firms should be barred from accepting consulting fees from the
corporations that they audit.
Al Fiore
Author: Roland & Diane Freeman at Internet
Date: 09/08/2000 4:18 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Independant Auditors
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Dear Sirs,
Regarding File No. S7-13-00; as an Investor, I do not feel that consultants and
auditors should be from the same company to both audit and consult to the same
business, for obvious reasons. You don't have to be too smart to figure out
why. Thank you for considering my opinion.
Roland Freeman dinro@pacbell.net
Author: "Richard Gay" at Internet
Date: 09/08/2000 4:44 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No S7-13-00 comment
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I am an individual investor and accurate, unbiased audits are vital to me. I
fully support the SEC in its effort to insure audit independence and I would
go so far as to require audits and consulting to not be allowed to be
performed by the same company.
Richard Gay
Author: "Paul M. Huber" at Internet
Date: 09/08/2000 10:35 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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Ref: File No. S7-13-00 Auditor Independence
I *strongly* support the SEC requiring an impenetrable firewall between auditors
and consultants.
Anybody who believes that auditors will not be influenced by consultants when
they work for the same company also believes in fairy tales.
I was very pleased to see the SEC do away with "selective disclosure." Now it
is time for the SEC to put an impenetrable firewall between auditors and
consultants.
One of the biggest differences between the USA markets and foreign markets is
the faith and trust in audited financial reports for USA corporations. This
faith and trust must be protected if we are to have healthy markets.
Respectfully,
Paul M. Huber paul.huber@home.com
929 Spinnaker Court
Chesapeake, VA 23320
Author: Robert Lancaster at Internet
Date: 09/08/2000 6:11 PM
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TO: RULE-COMMENTS at 03SEC
Subject: auditors and consultants
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As a citizen and an investor I support in the strongest terms the
mandatory separation of auditing and investing. The same financial
entity--business, corporation, or individual--who audits a company should
NOT be allowed to serve as a consultant. The claim that no hard evidence
of impropriety is available is specious and idiotic. To imagine that no
impropriety would ever occur is to believe in the tooth fairy. Every
single thing we know about humanity tells us that it is bound to occur,
not in every case but in many cases. Please take expeditious action to
prevent it.
Sincerely,
Robert Lancaster
145 Fairiview Lane
Paso Robles, CA 93446
Author: Bernie at Internet
Date: 09/08/2000 10:17 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Separation of auditing and consulting businesses
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Based on my direct experience I would argue that it is important to have
these two services completely independent of each other.
It is common for auditing firms to sell their related consulting
services. It is even a responsibility of audit partners to generate
additional business for their company, including consulting business.
Clearly this creates moral dilemmas for any auditor who might prepare a
critical, or negative, audit report.
It is (or was) also common for consulting companies that have an audit
business to claim that one of their advantages when competing for
business is that the consultants will have an advantage because of the
familiarity with the potential consulting client that the audit partners
bring with them from years of working with the client. Clearly this
implies that the consultants will have access to, and benefit from,
audit information and also has tremendous potential to influence audits.
This relationship between consultants and auditors does not just have
the potential to lead to "soft" audits. It also has the potential to
lead to focused audits that highlight flaws which would demand the
services of consulting brethren to correct.
>From every point of view the consolidation of auditing and consulting
services under a common umbrella are not in the best interests of the
clients nor of the public.
Bernard Mayoff
1411 Huntington Drive
Richardson, TX 75080-2812
Author: "Harvey E. Merlin; MD" at Internet
Date: 09/08/2000 7:40 PM
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TO: RULE-COMMENTS at 03SEC
Subject: S4 13-- 0
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I believe there should be as much space as possible between financial
consultants and the actual auditors. It is an accident waiting to happen.
Let some firms consult and others audit. Signed--a Motley Fool Stock owner.
Harvey E. Merlin, MD
Author: "Herbert Norton" at Internet
Date: 09/08/2000 5:25 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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I think that the SEC should take strong measures to make
sure that auditors are being truly independent. Our
financial system depends on being able to believe the
numbers that companies put out. There have already been
a number of cases where auditors have not been diligent
enough in ferreting out company problems. There
accounting independence should not be compromised by
consulting fees.
Herb Norton
hnorton@alum.mit.edu
Author: "peter paget" at Internet
Date: 09/09/2000 10:29 AM
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TO: RULE-COMMENTS at 03SEC
CC: Fool@MotleyFool.com at Internet
Subject: Audit Independence
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Dear Sir/Madam:
Your proposals regarding Audit Independence are of great interest to me.
I am a small investor, $200,000.00 give or take. Investing is the way I am
building my retirement assets. I am a practicing lawyer.
From my experiences as a practicing lawyer I have seen the subtle
machinations of people of reputed independence working together to obtain a
common goal for their own individual benefits losing independence of thought
and judgment, compromising their own objectivity and ethical considerations
in the process. Large profits or greed, as you want to view it, can
insidiously bend judgment when enormous stakes are involved. Of course, in
these kind of situations there rarely is hard evidence or a "smoking gun" to
substantiate what happens. People rarely lay out their conscious mental
processes and may to some extent not even recognize their own failure to
exercise independence of judgment. Protestations to the contrary by the
parties involved, the so-called independent auditors and the businesses, are
merely self-serving and are meaningless in truly determining what is in the
best interest of the investing public and the nation.
Over the last several decades, so-called independent auditors have failed
numerous times leaving investors with millions, if not billions, in losses.
I recognize the not all of these failures are due to the failure of
independent judgment because of outside business contracts with the audited
companies, however, even if none of the audit failures were so caused, the
public appearance of the loss of independence of the audit function will
measurably lessen the publics' acceptance and reliance on "independceen
audits." I for one.
I support SEC rules that would totally separate the audit function of
independent auditors from ANY business connection or relationship with the
companies they audit for reports to be disseminated for shareholder or
public consumption. I suggest making the rule so comprhensive and all
encompassing that the auditors cannot wriggle around it. This would include
that the owners of the audit company and the business consulting company
cannot have common onwership interest or have common officers or directors.
I think you should establish true and complete independence of the audit
function in the public interest.
Thank you for your consideration
Peter E. Paget
Author: "The Doctor" at Internet
Date: 09/08/2000 6:35 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Rules for auditors
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Dear Folks:
I believe very strongly that auditors should have not another business
connection with any element of either company being audited or performing the
audit.
The reasons are: too easy to have conflicts of interest, the appearance of
impropriety, and just a bad gut feeling about it. This arrangement smells and
should and must be eliminated.
I have seen, first hand, the devastation that contractors can do in the military
sector when they not only stock the henhouse but guard it as well. I would
prefer not to see this get out of hand in the securities sector. Thank you very
much for listening.
Dr. David W.Smith
12 Concord Drive
White Hall, AR 71602
Author: at Internet
Date: 09/08/2000 8:21 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditing and Consulting hearings
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Gentlemen,
As a private investor I look to the SEC to protect my interests by assuring
impartial analysis of company data. It is incongruous that a company that
audits financial information should be allowed to perform non audit duties
with the same company. As an Oklahoman, I witnessed this firsthand in a
fiasco of monumental proportions when about twenty years ago the Penn Square
Bank in Oklahoma City collapsed, taking with it First Chicago Bank and
plunging our city into a ten year long depression.
Such conflicts of interest must be stopped. I greatly appreciate that you are
looking into this matter and that a swift resolution will result.
Sincerely
Dan W. Tubb MD
105 S. Bryant #400
Edmond, OK 73034
.
Author: at Internet
Date: 09/08/2000 7:58 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Audit issues
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While I don't understand a lot about the process that auditors go
through when they evaluate a company's finances, I do know what I want
them to find--the truth. If their relationship is colored in anyway,
then this look at the books may not represent the whole truth. As an
very small investor that relies on my own limited look at their
quarterly and annual statements, I look to the auditing process to make
sure that the intricacies of the financials are what they seem.
Therefore, it is a no-brainer to expect an auditing firm to not also be
a consultant to the company that they are examining.
Sincerely,
Donna Valle
Author: "Wolff" at Internet
Date: 09/08/2000 11:54 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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I strongly urge you to place in effect "File no.S7-13-00" . Stockholders have
been kept in the dark long enough. Thank you, William S. Wolff, 8437 Gateway Ct.
Englewood, FL. 34224, bkwuf@ewol.com
Author: "taichiplayer" at Internet
Date: 09/08/2000 7:42 PM
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TO: RULE-COMMENTS at 03SEC
Subject: analysts reports
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I would urge you to investigate the correlation between brokage analysts
upgrades and downgrades with the brokerage buying and selling of the stocks
mentioned in the analyst report. I believe it would help the individual
investor to know if a brokerage buys a stock at a much cheaper price after a
downgrade of the stock by their analyst.
A rule requiring the brokerage to reveal their holdings a week before or
after an analyst's report would be very helpful in determining any bias in
the report. Thank you for the rule changes that help the individual investor
make informed decisions.
Richard Woodburn
http://www.sec.gov/rules/proposed/s71300/0908b02.htm
