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:  "Annie DeCelle"  at Internet
Date:    09/25/2000  2:23 PM
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TO: RULE-COMMENTS at 03SEC
CC:  at Internet
Subject: S7-13-00
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716     Old Mill Road
Pittsburgh, PA  15238
     
September 15, 2000
     
     
Mr. Jonathon Katz, Secretary
Securities Exchange Commission
450 Fifth Street, N. W.
Washington, D.C.  20549-0609
     
     
Dear Mr. Katz:
     
I am a Certified Public Accountant (CPA) writing to express my disagreement 
with the proposed regulation by the Securities Exchange Commission (SEC) to 
govern the CPA profession's independence.  With the growing global economy, 
the CPA profession has expanded to continue to meet the needs its clients. 
The SEC's concerns about those changes should be addressed using the 
vehicles in place between the SEC and the American Institute of CPA's 
(AICPA).  Those vehicles will continue to be circumvented if the proposed 
regulations are passed. If the SEC were to work more in conjunction with the 
AICPA and those in the profession, it would realize there are far reaching 
negative implications of implementing these regulations.
     
It is understandable that the SEC has concerns regarding independence of CPA 
's. However, the profession has a history of working with other 
organizations, including the SEC, to address issues, with the AICPA making 
the final decisions to govern the CPA profession. It would be in the best 
interest of the profession, the SEC, the clients, and the investors of its 
clients, to continue in that vein.  It is not the role of the SEC to govern 
any profession other than those directly involved in the issuance and 
trading of securities. Allowing the SEC or other entities to govern the CPA 
profession would undermine the very independence we are trying to protect.
     
Like the SEC, I also believe in protecting the best interests of investors 
in American securities. But the current proposal  will negatively impact the 
corporations we serve, the same companies whose investors the SEC is  trying 
to protect.
     
As a CPA who worked in public practice for six years, providing audit, tax 
and consulting services to my clients, I can attest that knowing one aspect 
(like auditing for example) of the business of a client makes me a more 
knowledgeable professional to more cost effectively offer the client 
services in other disciplines of accounting (like consulting on accounting 
system issues). To affectively audit any business a CPA must become educated 
in the specifics of that business. So it makes sense to enable the client to 
utilize that same firm for other services. The proposed regulation 
eliminates that option for the client  since it requires the client to 
utilize another firm for non-audit services. So both firms would bill the 
client for the time to acquire knowledge of its business, instead of just 
one.
     
 The need for the client to pay more to obtain quality services will affect
the clients' ability to provide cost effective operations. This will change 
their ability to continually provide earnings that will protect the 
investments of securities holders. And the lack of consulting fees to audit 
firms will create a profession that has less financial ability to attract 
and retain a quality work force.
     
The CPA profession's ability to attract and retain a quality workforce will 
also be limited by the proposed regulations since it limits the 
opportunities available to accountants: if accountants can only work in 
auditing, they may select other jobs where more diverse opportunities exist. 
Depleting the profession's ability to attract and retain qualified 
professionals will result in less quality audit services being provided to 
the clients which in turn leaves investors at greater risk.
     
Here is another example of the proposed regulation that would create a great 
disservice to clients. As a CPA serving a client base of various companies I 
can offer clients a wealth of experience that they may not have on their 
staff. I acquired that experience by working for different clients in 
different businesses and industries and assisting them in both dealing with 
their business issues and in auditing their businesses. That knowledge is 
very valuable to clients, especially those who may have management that have 
only had a single or few employers. Although the business decisions are the 
clients, the availability of information of CPA's who have worked with 
multiple clients  enables companies to make more informed decisions.
     
For example, I have seen clients with various financial systems and know the 
capabilities and limitations of various software packages because of my 
experience. This knowledge, when shared with a client, could save the client 
valuable time in researching options and provide real-life experiences about 
the systems' abilities and limitations. This may prevent a client from 
making a decision to purchase a system based solely on what it is told by 
vendors who do not always share weaknesses in their product offerings.  I 
would not want to make the software selection decision for my client, but my 
knowledge would provide valuable information to enable it to make a more 
informed decision, increasing its ability to financially succeed. The 
current proposal of the SEC would prohibit CPA's from assisting clients with 
financial information systems design and implementation.
     
.
I believe further analysis is needed to determine the true drivers of 
independence that the SEC believes are in jeopardy of being breached. Those 
issues and proposed solutions to concerns should be addressed specifically 
and individually, not with broad sweeping regulations that create more 
expenses for the clients and more risk for investors. And the final decision 
on how those issues are governed by the CPA profession should be made by the 
AICPA, not the SEC. This will enable CPA's to maintain their independence and 
continue to provide the quality services.
     
Sincerely,
     
     
     
     
Maryanne DeCelle, CPA

Author:  "SUSAN EZEKIEL"  at Internet
Date:    09/25/2000  7:20 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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** High Priority **
     
I am a CPA in a local firm.  I am in opposition to the SEC proposed guidelines 
to limit the scope of services performed by accounting firms.  
Frequently, the  non audit services needed by an audit client are designed to 
increase productivity or profitability of the audit client.  Who better to offer
in depth, concise coaching than the firm who has studied and audited the 
company.  To not allow the audit firm to provide these much needed services 
would be a disservice to the company and ultimately to the shareholders who 
would be forced to pay a higher price for these services.  This is due to the 
fact that the second CPA firm would be required to begin at "square one" in 
order to obtain an understanding of the audit client, something that would be 
readily available to the audit firm.  Any doubt about the CPA firm's 
independence on the non-audit engagement is already addressed in the existing 
ethical and professional rules already established.  To further add restrictions
would place an undue burden on the audit company and ultimately the public.
     
Sincerely,
Susan C. Ezekiel, CPA
Cobb Ezekiel Brown & Company, P.A.
P. O. Box 387
Graham, NC  27253
susan@ceb-pa.com
     
     

   Author:   at Internet
Date:    09/25/2000  6:54 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Dear Mr. Jonathan G. Katz:
     
I want to offer my support for the changes the Commission is proposing for 
auditor independence.  I commend you and your committee for this initiative 
aimed at improving and modernizing the public accounting profession.
     
The work done by public accountants must be both independent and perceived 
by investors and others in the public arena as independent.  Anything that 
compromises that position should not be tolerated.   I believe auditor 
independence will be best achieved by curbing the proliferation of 
non-audit services provided by a public accounting firm to its audit 
clients.  I think a ban on these non-audit services is the only way to 
guarantee compliance.  There are plenty of non-audit clients that audit 
firms can pursue to provide their non-audit services.  At a minimum, the 
proposed proxy disclosure requirements will help the public understand the 
relationship an entity has with its public accounting firm.
     
There are many non-audit services that could, potentially, impair 
independence.  Certainly any outsourcing of the internal audit function to 
the organization's external auditing firm impairs independence.  In 
addition, we must  also look deeper and review services such as financial 
information systems design and implementation, appraisal or valuation 
services, actuarial services, human resources and many management 
functions.  I believe that auditors cannot function as part of client 
management and remain independent.  It is human nature, especially when 
fees are involved.
     
The proposed SEC rule amendments regarding auditor independence helps to 
strengthen our profession.  I urge you to go forward with these needed 
changes including the relaxing of restrictions on investment and employment 
imputed to a public accounting firm.
     
Thank you and all the Commissioners.
     
Sincerely
Todd M. Havens
     

   Author:   at Internet
Date:    09/25/2000  9:46 AM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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I wish to express to you my comments regarding independence of Certified 
Public Accounts performing audits and also performing other services such as 
consulting.
     
My firm is a local firm and we do not perform audits for SEC clients.
     
My objection to the contemplated proposal is that it will eventually curtail 
our ability to perform audits and also offer management consulting, estate 
planning for the owners and even bookkeeping services where all that we do is 
post the client's prepared information just as the client gives it to us.
     
I certainly feel that our independence is not jeopardized in any way by our 
offering these other services to our clients.
     
I respectfully request that you reconsider your position on this Independence 
issue in S7-13-00.
     
Sincerely,]
Broadus L. Smith, C.P.A.