Subject: Comments on Proposed Rule Regarding Auditor Independence
Date:    07/24/2000 9:45 AM
     
     
Dear SEC:
     
We find the concerns of auditor independence addressed by the proposed rule 
to be completely valid.  While slightly confused as to how the SEC rule 
"fits in" with the efforts of the ISB, we are nevertheless very pleased to 
see the proposed rule.
     
We note that continuing to allow auditors to provide tax-related valuation 
is justified by the fact that the IRS will audit this work.  You may find it 
interesting that the IRS does not hire CPA (Big 5) firms to represent the 
Service in tax-related valuation disputes, because they are viewed as 
advocates of the taxpayer.  The IRS could probably provide many instances of 
where valuation positions were taken to benefit the audit client at the 
expense of objective valuation theory (some of which have been publicized). 
This is not to question your conclusion regarding tax-related valuations, 
but only to say that this area provides concrete examples of mutual or 
conflicting interest on the part of auditors.  In other words, your concerns 
can be demonstrated even beyond "common sense."
     
You mention in the body and Appendix A of the proposed rule many types of 
valuation and whether each will be allowed as tax-related or not allowed as 
financial.  We would appreciate guidance as to how to classify cost 
segregation services performed on new construction.  This service determines 
the depreciable life of new assets for tax purposes, but also generates fixed 
asset listings for book purposes.
     
Thank you,
John Lyon
Senior Vice President
Arthur Consulting Group, Inc.
Westlake Village, CA
(818) 735-4800