Date: 09/19/2000 4:53 PM Subject: Reference: File No. S7-13-00 This email is being forward for Jack Cotton, CEO, of Suby, Von Haden & Associates, S.C. A hard copy is also going out to you today. If you would like to reach Mr. Cotton directly, you can email him at cotton@sva.com or call him at (608) 831-8181. Dear Secretary Katz: Upon reviewing the Securities and Exchange Commission's (SEC) plan to restrict non-audit services as it appears in File No. S7-13-00, I felt that it was important that I forward my concerns to you about the impact this ruling could potentially have on CPA firms working with both publicly and privately-held businesses. As Chief Executive Officer of Suby, Von Haden & Associates, S.C. - a regional accounting firm established in 1974 with offices in Madison and Milwaukee, Wisconsin, as well as Rockford, Illinois - I have been privileged to work with a variety of small business clients, primarily those operating closely-held businesses. In this capacity, I have also had the opportunity to see the evolution of the services accounting firms have been asked to provide. At this time, It is my belief that the SEC's concerns (as expressed in File No. S7-13-00) are in some instances valid. In addition, I support the SEC's stated purpose, which is to ensure the independence - hence, reliability and validity - of audits performed by accountants who may have a potential conflict of interest. Having said this, I also understand that many would consider the concerns of a CPA firm (with limited SEC clients) unfounded as it would appear we are not the SEC's primary concern. Having reviewed the few examples provided in File No. S7-13-00, it would appear that the SEC's primary focus is on the Big 5 accounting firms providing services to SEC clients. However, the impact of File No. S7-13-00 will reach far beyond the Big 5 as each state potentially applies these independence regulations across all CPA firms. The Greatest Impact If these regulations pass, it is quite probable that the people hurt most may very well be the people it was created to protect: our clients. The evolution of the accounting firm has been the result of the growing needs expressed by our clients. Today, we are not simply auditors. We are controllers, consultants, and financial advisors, asked to provide an independent and objective viewpoint on a variety of financial topics. In many instances, we have had to grow beyond the basic accounting firm, adding a variety of professionals with the expertise to meet our clients' ever-changing needs. Quite simply, if we do not provide the many non-audit related services that we do, where will our clients go to get them? For many privately-held businesses, it is not financially feasible to have a full-time financial planner, retirement planning specialist, human resources professional or marketing coordinator. In addition, building relationships based on trust do not happen overnight. Many of our clients have expressed great trepidation about entrusting new advisors with their financial future, often looking to us for professional references. In addition, File No. S7-13-00 will also force many firms to reevaluate and prioritize the services they provide based on the financial security of the firm. With audits becoming a smaller percentage of the overall financial picture for accounting firms, many firms may simply advise clients to get audit services from another accounting firm. This will force many clients to locate an accountant willing to perform only audits, as the list of restricted non-audit related services may continue to grow. Responding to Changing Times As the world of accounting takes on a greater shade of gray, the growing number of instances of questionable behavior or possible impropriety are - unfortunately - to be expected. However, no where in File No. S7-13-00, does one get the sense that the SEC's concerns are manifesting themselves to the degree that this response would suggest. In addition, the increased competition to attract clients and keep clients starts with building an established firm. For any accounting firm, this begins with having a reputation for being independent, objective, knowledgeable, and proactive. As some accountants may chose to endanger all that they have built simply to make one client happy, there are just as many, if not more, accounting firms giving their clients the facts and ensuring that they are running their businesses by following the letter of the law. Having stated what I feel are the facts, it is my recommendation that the SEC reconsider their somewhat excessive response to the present state of accounting firms. With the many regulations already in place for accounting firms, it would appear that the mechanisms to watchdog the accounting industry are already in place and simply need to be utilized. Having already established a quality control division within our firm, we believe that we have responded to the need to set the parameters to ensure that the independence of our accountants is never in question. We are monitoring our own performance, and welcome the SEC to do the same. In conclusion, it is important that we remember that - in the end - the consumer will always have the final say. If a consumer questions the independence and objectivity of an accounting firm's results, they always have the right to question the findings and seek a second opinion. By restricting accounting firms, the SEC is only limiting consumers and potentially leaving many to guess the independence of all accounting firms. Let's fix the problem; not create a much larger one with such drastic measures. Thank you for your time. Upon your request, I welcome the opportunity to discuss the situation with you further. Sincerely, SUBY, VON HADEN & ASSOCIATES, S.C. Certified Public Accountants CEO Jack R. Cotton, CPA