Date:    09/19/2000  2:12 PM

Subject: Re: File No. S7-13-00  SEC Proposal To Limit other services 

Gentlemen:
I have been a CPA in NJ since 1979 and have recently learned of your proposal 
to limit the services a CPA firm can perform for an audit client registered 
with the SEC.
     
For years I have supported this position. Having worked for CPA firms prior 
to building my own practice I always found it difficult to reconcile how an 
audit could be truly independent when without this client the CPA firm would 
suffer significant financial hardship. I have observed the cozy relationships 
between firm partners and the principals and employees of the companies being 
audited. For many years I watched this go on and had a problem accepting any 
audited set of financial statements as being accurate and unbiased.
     
I am surprised that it took so long to arrive.  Today with so much of the 
money in the country invested in the stock market either through pension 
plans, 401k's, or privately, it is imperative that the investing public be 
protected from compromised financial statements when making investment 
decisions. Only your office can provide this protection and it has a 
responsibility yo do so.
     
We have all heard the stories about audit partners enjoying large credit 
lines, loans and mortgages from the very clients they are auditing and 
depending on the industry other benefits are probably being extended to them. 
In addition their compensation and continued employment in many cases depends 
on the retention of the audit client. How can there be any independence and 
objectivity when they are  clouded by the potential for these events to occur?
     
The point I am trying to make is that I believe your proposal to limit 
services is a good starting point to add credibility to financial statements 
however this should be only the beginning. More important than this is the 
case of public companies where the entire investing world relies on the 
accuracy of the financial statements. These statements must be prepared under 
conditions that are perceived to be independent in both fact and in 
appearance. The only way to remedy what I believe is a gross shortfall in the 
integrity of the financial statements of publicly traded companies is as 
follows.     
    1) Set up an independent board that assigns public companies to CPA firms 
for a fixed number of years to be audited
        and then rotated to another qualified firm thereby totally removing 
the decision process from them and adding 
        credibility to the audit.                                             
     
                        2) Require all public companies to pay an audit 
(membership) fee directly to the board, as escrow agents, who will
       disburse it to pay for the audits. Obviously the amount of the fee 
will vary depending on the company.
     
Michael Maher, CPA