Date:    09/06/2000  1:18 PM

Subject: public comment re:  S7-13-00

Dear Chairman Arthur Levitt, Commissioners Paul Casey, Isaac 
Hunt, and Laura Unger,
     
I am a CPA practicing in a small firm in Fairbanks, Alaska.  I am 
writing to express my grave concern regarding the SEC's proposed 
rule to prohibit auditors from rendering non-audit services to their 
audit clients.  We do not do SEC work, however, rules promulgated 
by the SEC usually set the standard for the industry, as other 
regulators adopt them.
     
As a small firm practitioner, serving small businesses, this ruling 
would be crippling both to our practice and to our small business 
clients.  Our clients are closely held, family businesses without the 
resources to hire comptrollers.  The accounting is normally 
performed by a full-charge bookkeeper.  Our clients rely on us to 
be their business advisors, tax planners, estate planners, and 
consultants in a myriad of other areas.  They rely on us to advise 
them on difficult accounting issues.  They rely on us to draft their 
financial statements in the course of our review or audit 
engagement.  They rely on us to provide adjusting and closing 
entries to their general ledger to correct their internal bookkeeping. 
They trust us more than anyone.  Our position as their most 
trusted business advisor allows us to know their business 
intimately, which allows us to provide improved audits.  The better 
you know your client, the better you can audit, as you know what 
the risky areas are and where to concentrate audit effort.
     
This ruling, if adopted by SEC and then adopted by other 
regulators, would effectively require a firm to be either an auditor or 
a non-auditor.  It would require small businesses, which are often 
already strapped for cash, to hire two firms and deal with two sets 
of accountants, at a greatly increase cost to them, both in money, 
time, and productivity.
     
There has been no compelling evidence to suggest that providing 
non-attest services to an audit client impairs independence in an 
audit.  I believe this proposed ruling is out of touch with the needs 
of small business.  This ruling would also severely hamper 
competition.  If this rule is implemented, I believe many more CPA 
firms would opt to no longer provide auditing services, and therefore 
the pool of available auditors will shrink considerably.  This would in 
turn drive up the price of obtaining an audit, and probably lower the 
quality of audits, because quality business advisor-CPAs will no 
longer provide them. 
     
I respectfully request that you defeat this proposed rule.
     
Sincerely,
     
     
     
Arlene Koenig, CPA