September 21, 2000


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

RE: File No. S7-13-00 - Proposed amendments to Rule 2-01 of Regulation S-X and Item 9 of Schedule 14A under the Securities Exchange Act of 1934.

Dear Mr. Katz:

As Executive Director of DFK International/USA Inc. ("DFK/USA"), a 501(c)(6) non-profit association of independent accounting firms, I urge the SEC to reject adoption of the above-referenced proposed amendments to the rules and regulations promulgated pursuant to the Securities Exchange Act of 1934 ("the Proposal").

There are many reasons that accounting firms (including our member firms) are opposed to the Proposal. However, this letter is not intended to enumerate every reason our individual members oppose the Proposal.

Rather, this comment is focused on why the Proposal would be particularly harmful to accounting firm associations such as DFK/USA, and by extension, to our member accounting firms, and in turn, to their clients and the public.


DFK/USA comprises 24 mid-sized accounting firms in major markets in the United States. Our Bylaws require all members to join the SEC Practice Section of the AICPA in order to assure a minimum level of quality to fellow members and their clients. This requirement is maintained

regardless of whether the firm actually performs audits of public companies. Through participation in DFK/USA, our members learn best practices, earn continuing professional education credit, and count on their fellow members as a resource for technical expertise and support in every area that public accounting firms engage in today. Our members share ideas and information to assist in the servicing of their clients and in the growth of their own practices. This sharing of information and ideas is conducted at several annual conferences, as well as via email, the Internet, phone and fax. DFK/USA helps facilitate business opportunities around the Nation and the world.

Our members' competition is generally the so-called "Big Five" accounting firms as well as other mid-sized accounting firms, many of whom are members of similarly structured associations. Membership in DFK/USA helps our member firms stay competitive in their markets and deliver top service to their clients.

The Proposal's Effect on DFK/USA

DFK/USA is particularly concerned that the proposed definition of "affiliate of the accounting firm" (see, Proposed Rule 2-01(f)(4)(i)(E)) attributes to the auditor the actions and interests of persons "co-branding" or using the same (or substantially the same) name or logo, cross-selling services, or using co-management. The SEC has indicated that where the auditor has taken steps to identify itself publicly with another person, the auditor shares, and will be perceived to share, a mutuality of interest with that other person.

This provision would be fatal to the continued existence of associations of accounting firms such as DFK/USA. Indeed, some of our members use the DFK name or logo in their marketing, including but not limited to letterhead, business cards, web site, brochures, etc. Some member firms have incorporated the letters "DFK" into their firm name.

The SEC asks the following questions regarding this provision: 1) Would the relationships described [in the Proposal] impair, or appear to reasonable investors to impair, an auditor's independence? 2) Are there any [definitions] that should be excluded from the definition

of "affiliate of the accounting firm" for purposes of determining impairments to independence?

The relationships described in the provision appear to include the relationships among firms in an association of accounting firms such as DFK/USA. However, DFK/USA does not believe that these relationships impair or would appear to reasonable investors to impair, an auditor's independence. Accordingly, at a minimum, the SEC should craft an exception to the "affiliated firm" definition that allows accounting firms to retain their membership in accounting firm associations such as DFK/USA without running afoul of the rule. To do otherwise would mean the loss of a tremendous resource to accounting firms and their clients.

Accordingly, for all the foregoing reasons, DFK/USA urges the SEC to reject adoption of the Proposal.


Jay Hauck
Executive Director
DFK International/USA Inc.
1255 Twenty-Third Street, N.W.
Washington, D.C. 20037

202.452.1588 voice
202.833.3636 fax