September 18, 2000

Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: File No. S7-13-00

Revision of the Commission's Auditor Independence Requirements

Dear Mr. 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.

I am a CPA with approximately 15 years of experience. I spent a portion of my career in public accounting with one of the Big 5 and the remainder of my career with a professional services firm offering non-attest type services. I've seen first hand the challenges of maintaining independence in situations in which firms are performing a wide spectrum of services.

I reviewed the proposed rule amendments and also the hearing testimony from the hearing held July 26, 2000. Like many of those providing testimony, 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 an outright 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. But we must also look deeper and review the services that are not so obvious in their ability to impair independence. Services such as financial information systems design and implementation, appraisal or valuation services, actuarial services, human resources and many management functions must also be reviewed. I have always believed that auditors cannot function as a part of client management and remain independent. It is human nature, especially when fees are involved.

Now is the time to strengthen and modernize our profession and the proposed SEC rule amendments regarding auditor independence do just that. 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, I look forward to working under the new guidelines.

Cathy Davis, CPA