Date:    09/14/2000  9:31 AM

Subject: S7-13-00

While I am not an accountant, I have been a leader in the business of 
accounting for nearly 25 years - Manager of Tax Education - Arthur Andersen 
& Co, Director of Marketing -Checkers, Simon & Rosner, currently Director of 
Research - Illinois CPA Society. As such, my comments relate to the impact 
of your independence proposals on the business rather than the practice of 
accounting.
     
The rules as proposed will shatter the economic viability of the business of 
accounting. Most accounting firms have remained viable only because they 
have developed tangential services and niches to subsidize the marginal 
profitability of the accounting practice. Virtually all the mid tier firms, 
if forced to choose today between attestation and tangential services would 
have no choice but to abandon audit and reviews.
     
Because the independence standards for non-public companies mirror the 
standards for public companies, the proposal has the potential of 
disenfranchising most of the practicing accountants who serve the hundreds 
of thousands of small businesses in the country.
     
While I will not presume to judge the merits of the proposal in producing 
more reliable financial statements, I sincerely hope someone is working to 
assess the much broader picture of what the impact will be on governmental 
entities, not-for-profit organizations, banks, accounting firms, schools of 
accountancy, and especially small, closely held businesses and their 
shareholders.
     
Accountants are the referees of business. We already are seeing a mass 
exodus in favor of more lucrative employment. We are seeing a sharp 
reduction in the number of bright students prepared to make a career of 
accounting. Right now, the profession is struggling to address these trends. 
If the proposal accelerates the losses, there will be chaos in the economy 
from top to bottom. Misallocation of funds, errors on tax returns, fraud and 
deceptive financial statements in the non-public sector are likely to 
dramatically increase in the absence of experienced referees.
     
To avoid such chaos, the proposal needs a phased implementation process, an 
"environmental impact" statement that looks at cost vs. benefit and/or some 
evidence that these broader implications have been considered.
     
Edward J. Gabrielse