September 18, 2000
1-page - E-mail: firstname.lastname@example.org
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
Washington, DC 20549-0609
Dear Mr. Katz:
REFERENCE FILE NO.: S7-13-00
I am writing to state my firm's opposition to the proposed Securities and Exchange Commission (SEC) regulations that would limit the services an audit firm can provide to its audit client. My firm is a member of the AICPA's private company practice section and, hence, is not immediately affected by these proposed regulations. However, it is my firm's concern that these proposed rule changes would set a precedent for other regulators and within a short period of time would directly affect my firm by its application to our clients.
I believe the SEC is moving too hastily and not providing an adequate public comment period in addressing an issue that would likely have a profound affect on the public accounting industry in our country. Further, none of the studies or reports cited by the SEC in their initial proposals suggested that additional services provided by audit firms impaired the audit effectiveness. In fact, the AICPA's studies suggest that performance of non-audit services contributed to a more effective audit.
Additional concerns that have a potential impact on my firm include the affect on providing income tax related administrative services to our clients. The SEC's initial proposal suggests that these rule changes would not affect tax-related services, yet the rule change would act as a ban on an accounting firm performing "advocacy" types of services such as representing audit clients before the IRS. This type of ban would also effectively preclude my firm from entering into almost any type of joint-venture or partnership since my accounting firm's independence could be impaired as a result of activities by other parties in which it may have only an immaterial investment.
The SEC's proposal to restrict services offered by auditing firms represents a fundamental change in our industry that myself and my firm believes is unwarranted. Our profession has successfully given investors and other financial statements users the reliable, independent data they need for the past century. While there have been independence questions arise over that time period, the industry has diligently and successfully addressed those with our own code of ethics and current regulations. My firm and I believe that continued and renewed independence communication using current standards will adequately serve our country's needs.
Thomas E. Copley, CEO
cc: Jane Egan, Acting Executive Director, Montana Society of CPAs