Author:  "Garland Boyd" 
Date:    09/19/2000  11:01 AM

Subject: Re: File NO.S7-13-00

I just received correspondence from my state CPA organization urging me to 
let you know I oppose your prospective rule change to prohibit CPA firms 
from providing non-audit services to their audit clients.
     
However, in fact I am very much in favor of such a rule.  It has always been 
a puzzlement, if not an outright embarrassment, to imagine that any firm can 
actually claim to be independent when they are receiving significant 
monetary compensation for other non-audit services which could be at risk or 
put at risk in the event of an unfavorable audit or decision regarding an 
audit.  Even if every CPA firm's integrity is above reproach and internal 
procedural safeguards and organizational separations are in place and 
effective, the mere appearance or possibility of a conflict of interest 
alone is sufficient reason to prohibit the practice.
     
Of course the temptation for the company being audited to use the influence 
created by payment for other services not related to the audit is present 
regardless of the audit firm's intentions and procedures. Companies with 
goals other than accurate, fair reporting will not be happy to lose that 
influence; but, the public users of audit information will benefit.
     
Of course the CPA opponents with vested interests will maintain that both 
fees for audits and other services will rise due to the need (and associated 
cost) to learn about the business twice - once for audit and again for other 
services.  But if they are really independent now, aren't they already 
having to learn the business twice to avoid using the same people on both 
engagements?  If not, their independence is surely questionable; if so, the 
costs will not really rise, they will just be paid to two different 
companies.  Even if costs do rise, this should be a one-time expense which 
would seem to be well worth the audit independence achieved.
     
My only question is - why has it taken you so long to address this issue? 
Even when I was in college, accounting students could see through the 
duplicity of the current arrangement for the farce it is.
     
Good luck.  I hope you have the wherewithal to stand up to the vested 
interests.