David F. Lawrence, CPA
8618 Modesto Court
Indianapolis, IN 46278
dflindy @ AOL.com

September 25, 2000

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

Reference File No.: S7-13-00

Mr. Katz,

I am writing to comment on your proposed rule amendments regarding auditor independence. While I agree with the Commission that this ever-changing economy requires continual review of independence rules, I strongly disagree with the portions of the Commission's proposed rules that severely restrict non-audit services that could be provided to a public audit client.

It appears to me that this proposed regulation is unnecessary. The decision to move forward with this rule prohibiting non-audit services has been made without evidence of non-audit services compromising any audit quality or auditor independence or causing audit failure, in any significant way.

The proposal ignores the fact that the Panel on Audit Effectiveness of the Public Oversight Board concluded that "both the profession and the quality of audits are fundamentally sound." The Panel could find no evidence that a firm providing non-audit services damaged audit quality in any way. In fact, the Panel concluded that often non-audit services actually contributed to a more effective audit. It's especially interesting to note that the Panel was formed at the request of the SEC.

No SEC studies suggest that the scope of services impaired audit effectiveness nor did they conclude that a ban on non-audit services was appropriate. It seems as though the SEC's proposed rule is a solution that is in search of a problem.

I am concerned that this proposed regulation could have potentially devastating effects on my business while limiting the professional services choices for our clients. It has the potential to:

• set a precedent for other regulators, including state boards of accountancy, federal regulators, banking regulators, and others, to adopt similar rules, which would further damage accounting firms' livelihoods;

• preclude accounting firms from entering into joint ventures or partnerships, since the firm's independence could be impaired as a result of the alliance with other parties;

• restrict public companies freedom of choice when seeking outside professional services;

• bring about a negative effect on recruiting and retention qualified employees, as the best professionals will not want to be at a firm where much of the market is "off limits."

As a member of Crowe Chizek and Company, LLP's Financial Institutions Group, I work primarily with community banks and thrifts. These types of organizations desire the counsel and advice of their independent auditors more so than do their larger competitors. Our firm's ability to provide extended audit services, for example, has resulted in many smaller organizations introducing having an internal audit effort. The likely alternative would be to do nothing. In most cases, the scope of such services is simply the performance of legitimate and detailed external audit procedures more frequently than might be the case if the external auditor focused only on the external audit. If the proposed rule precluded those types of services or established an environment where they were not obtained, it would not be of benefit to those organizations, their Boards or their stockholders.

Also, while I understand the Commission's need to gather feedback from the largest accounting firms, I trust you will consider the significant effect of the proposed rule-making on accounting firms outside the five largest, as well as the effect on smaller public companies and non-public companies.

I would be happy to talk with you further about my concerns regarding this proposal. If you'd like more information, please contact me at 317-632-8989.

Sincerely,

David F. Lawrence