Comments on Proposed Rule:
Auditor Independence Requirements

Release Nos. 33-7870; 34-42994; 35-27193; IC-24549; IA-1884; File No. S7-13-00

Author:  "Lecouras; Alexis Mr."  at Internet
Date:    09/09/2000  11:28 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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This has been a concern of mine every since I started investing 2 years ago. 
The auditors are paid by corporations to count the company's beans, but 
doesn't this relationship create an opportunity for the corporation to tell 
the auditor how many beans it has?  The more "services" an accounting firm 
has to offer a company, the more dollars the corporation pays, thus 
empowering the corporation over the auditor further.  I know that 
accountants have to follow certain rules when drawing up income statements, 
balance sheets, and cash flow statements, but my understanding is that these 
rules do provide loopholes that allow a skillful accountant to fiddle with 
the numbers.  The auditor just has to be given the incentive to use these 
loopholes.  Given enough incentive, they may choose to forget their moral 
obligation as an auditor all together.
     
I don't even pretend to have a solution to this problem.  If the SEC feels 
that this is a viable solution, then I am all for it.
     
As an individual investor, I don't have the resources, the connections, or 
the realm of influence to find out what discrepancies may be in the 
financial statements of the corporations in which I have my life savings 
invested.  The SEC was created to insure that the little guy gets all the 
facts, and I applaud your efforts to this end.
     
Thank you.
     
Alex Lecouras
011-49-621-730-5352
DSN: 380-5352
     
     

Author:   at Internet
Date:    09/09/2000  2:31 AM
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Gentlemen,
     
I am very concerned about auditor independence.  If you 
believe that accountants should not have a consulting 
business because that weakens their independence, both 
perceived and actual, then stop them.  Currently, the 
accountants are self-regulated.  The problem that exists 
is that for the longest time the accountant's wallets 
ensured that they remained strictly independent.  Why? 
Because if the investing public lost faith in their 
opinions, then who needs them?  Accountants are fearful 
of government regulation of them, so they have to dance 
a very peculiar dance next to the line of actual 
independence and compromise.  Now that a new lucretive 
source of income has arisen--consulting--the accountants 
have become more willing to dance on top of, if not 
over, the line.  I understand that a challenge has been 
made that the SEC has not been forthcoming with examples 
of actual indepence violations, but the problem is 
fairly recent and many examples will arise.  
     
Perhaps now is the time to impose some muscle before 
serious damage is done to our investment markets.
     
Keep up the good work!
     
Regards,
     
Ken Miao

Author:  Dave Moody  at Internet
Date:    09/09/2000  12:21 AM
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Subject: File No. S7-13-00      Auditor Independence
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I am all in favor of the SEC's proposed new rule enforcing Auditor 
Independence.  There is no question in my mind that the current climate of 
mixing business (i.e. consulting) with the same company on which you are 
conducting an audit leads to less than objective audits.
     
Yours Truly,
     
David Moody
Davis, CA
     

Author:   at Internet
Date:    09/09/2000  7:19 AM
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There are two problems really at play here. One is the promotion of more 
business for the accounting firms and the inherent conflict; the other 
problem relates to the pressure that is placed upon those in the firm who 
have the least ability to resist - namely the youngest members of the firm.  
     
I have read the various stories in the New York Times, Motley Fool and the 
Wall Street Journal concerning this issue. Yes, I think it is wrong that 
there is such selective disclosure taking place in the audits. But let's 
examine the practices and who carries them out. The newly hired in the firms 
are the ones responsible for doing all the heavy lifting for audit work 
because these new members are trying to get enough hours of audit practice 
(500) for their license to practice. Don't you think the senior partners 
might have some real clout in having these dewey eyed accountants-to-be 
modify the audit plan?  In the whole scheme of things who takes the fall?  - 
Some cub accountant who is worked to death and wants to get a license after 
practicing a year for a big firm.  "Hey kid increase the billing in the 
consulting area and we might have a place for you there when you finish your 
audit work."
     
Therefore you might look at reducing and or modifying the number of hours 
state boards require these young workers to perform in the audit area.  Doing 
so might reduce the leverage that the senior partners have in this whole 
process.

Author:  "Michael Poythress"  at Internet
Date:    09/09/2000  4:30 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00 - Support for separating non-audit consult
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I would like to voice my support for separating auditing services from non-audit
services.  I believe there is a LOT of this that goes on that investors never 
hear about, and personally do not like the companies I invest in to be hiding 
numbers from me. 
     
The numbers they provide are some of the only evaluation means I have to 
consider one company versus another, and if one is providing false numbers, I 
cannot make an informed decision.  I do not have firm evidence of cases where 
non-audit consulting has distorted the audit, but the possibility that it could 
happen is chilling.  I also trust the SEC and their judgement in this matter.
     
Michael R. Poythress
     
     

Author:  Stephen Lange Ranzini  at Internet
Date:    09/09/2000  1:25 AM
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I seldom comment on proposed regulations, but this proposed reg really is 
very misguided!
     
Small community banks rely on their external auditors for a wide range of 
expertise they cannot afford internally.  Internal audits of information 
systems by external auditors are absolutely necessary to ensure compliance 
with FFIEC mandates.  We don't have this expertise internally.  At times 
when personel leave unexpectedly, internal operational audits must be 
outsourced to an external auditor until a qualified replacement can be 
found.  Two times in my firm's 12 year existence this has been required. 
There are a very limited number of firms whose services we can afford. 
Should we just stop doing internal audits due to employee turnover?
     
Prohibiting external auditors from providing these services is a bad idea. 
We rely on our auditors to supply these services because they can do it in a 
cost-effective fashion and are the go-to experts in banking because they 
have the personel and wide industry experience we need.
     
No one's independence is compromised by providing these services because 
different personnel inside the auditing firm provide them.  No external 
auditing firm would ever depend on our small amount of business so much that 
they wouldn't tell us to take a hike if we tried to influence their opinion.
     
Sincerely,
Stephen Lange Ranzini
Chairman, President & CEO
University Bank
Ann Arbor, MI

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Author:  "P. Sinz"  at Internet
Date:    09/09/2000  3:07 AM
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Dear SEC:
I normally like to leave the way business's run themselves up to themselves. In 
this case I do not believe it is a good idea. Most business's have their own 
auditors who work inhouse, but when it comes time for their public audit's they 
use a outside auditor. The reason, I think, is to prevent 
conflicts-of-interests, or the appearance of same. If business's start using an 
independant auditing firm 
 for other work than auditing then sooner or later there is going to be a
conflict-of-interest or the appearance of one. This is not going to do business 
any good and will certainly have a detrimental effect on investors who often 
have only these audits to go by as to how a business is doing. 
Thank You,

Paul Sinz
     

Author:  "Henry C. Young"  at Internet
Date:    09/09/2000  1:32 AM
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Thank You for proposing (and hopefully passing) the separation of auditing 
firms also providing consulting services to the same companies,  I agree 
that, that, is a formula for corruption and mismanagement.
     
   - Henry Young .'.
  

Author:   at Internet
Date:    09/09/2000  12:32 AM
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I agree with the SEC that auditors should be independent.  When a firm has a 
dual relationship, i.e., consulting and auditing then the risk of unethical 
accounting practices exists.  The ethical principles of at least some 
professions consider the problems inherent in dual relationships and address 
them.  Since the information provided in company financial audits is 
important to the entire financial world they should be without bias and 
unduly influenced by auditor/client dual relationships.

Author:  Jerome J Augustine  at Internet
Date:    09/09/2000  3:23 AM
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I agree with the SEC's proposal to keep auditing and consulting services 
separate to prevent conflicts of interest. It seems obvious to me that a 
firm that has a lucrative consulting account with a company may be 
tempted to produce  an audit that puts the audited company in the best 
possible light.  As a small investor I depend on accurate audits in 
making my investing decisions.
     
Thank you.
     
Sincerely yours,
Colleen Augustine
     
     
Jerome and Colleen Augustine
1104 W. Stratford Dr.
Peoria, IL 61614
coljer@juno.com
309-688-5425

Author:  John Behrman  at Internet
Date:    09/09/2000  3:39 AM
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I am strongly in favor of stronger rules separating the auditing and 
consulting parts of accounting firms. Issues which surface during an 
audit are used as openings for the consulting division to propose 
solutions, which typically receive favorable audit results the following 
year, regardless of the efficacy of the changes.
     
This is an issue where it is unlikely that specific evidence of 
wrongdoing will surface - those cases get settled and you'll never hear 
about them. But investors will pay the price.
     
I strongly encourage separation of these two business areas.

Author:  tabc  at Internet
Date:    09/09/2000  12:23 PM
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re: File No. S7-13-00
     
The problem of auditors being allowed to provide consulting services to 
companies is in immediate need of remedy.
     
The Securities and Exchange Commission's arguments for independence of 
auditors are thoroughly justified and should be fully supported in order to 
protect the investing public.
     
Tara Cannon
Norristown, PA

Author:  "J Clear"  at Internet
Date:    09/09/2000  4:05 AM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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To Whom This May Concern at the SEC;
     
     
For what it's worth, I would like to see accounting and consulting services 
kept separate to prevent conflicts of interest.  It is my opinion that with 
the ease of individual investors, like me, to do research on companies we 
invest in, we should be given every opportunity to learn the truth about 
those companies.
     
Thank you,
J. Clear
jsc5264@hotmail.com

Author:   at Internet
Date:    09/09/2000  2:18 AM
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Subject: File no. S7-13-00
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Dear Sirs: It has been brought to my attention that firms auditing the books 
of publicly companies have also been receiving consulting fees from the very 
companies which they are auditing and that said fees are very lucrative. My 
common sense tells me that about the strong possibility of a conflict of 
interest existing in such cases can persuade the auditing firm to skew the 
results reported about the audited company's economic health. although my 
information is that so far, no proof of such activity has been shown, I 
believe that regulations should be promulgated as a preemptive measure to 
prevent the possibility of such actions by the auditing firms  in the 
investors' best interest.

    Thank you very much for your consideration. 
    Harold Enloe
     

Author:  "aestevez"  at Internet
Date:    09/09/2000  12:35 AM
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I welcome the opportunity to express my hole hearted support for the action that
the SEC is taking to assure the independence of auditors.  As a business man, 
investor and minister, I feel that this is a step in the right direction.  I 
cannot imagine why this has not been done before.  I truly believe the only ones
opposed to a rule such as this would be those who benefit from the present 
awkwardness.  The system is plagued with "possibilities" for "Consultants" to 
"Overlook" certain areas of a clients audit trail.  Specially if it is a rather 
sizable "Consulting" client vs. it's potential for auditing.
The agency has a legal (as well as moral) responsibility to safeguard the Public
Perception of the Market.  It also has to protect investors from unscrupulous 
profiteers.  Although in all fairness I must admit that the actual number of 
these unscrupulous operators are a MINIMAL percentage of the outstanding 
business and accounting professionals in this great market environment.
     
André Estévez

Author:  Fred Reinders III  at Internet
Date:    09/09/2000  12:11 AM
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Subject: File# S7-13-00
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If you do not separate the two functions , you can demand a nice 
retirement nest egg to retire with.                       fredr@ior.com

Author:   at Internet
Date:    09/09/2000  6:54 AM
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TO: RULE-COMMENTS at 03SEC
Subject: "File No. S7-13-00"
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To Whom It May Concern:
     
I would like to see outside (consulting) services separated from auditing 
services in a meaningful way.
     
I am an individual investor who makes decisions based on what I see in a 
balance sheet through the quarterly and annual reports. I need to trust that 
the data there is true, because I have no other way of accessing meaningful 
information about a company.
     
Regards,
Pam Galligan
1939 Berkshire Place
Wheaton, IL 60187