TIMOTHY M. O'BRIEN, CPA
3804 S. Hudson St.
Denver, Colorado 80237
September 21, 2000
Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609
Ref: File No. S7-13-00
Dear Secretary Katz:
I am writing to you about Proposed Rule 65 Fed. Reg. 43, 148 (2000). This rule reflects substantial revision to Rule 2-01 of Regulation S-X, the Commission's only formal rule with respect to auditor independence. It also revises Item 9(e)of Schedule 14A (concerning the disclosure required in registrant's proxy statements), pursuant to Section 14(a) of the Securities Act of 1934.
This proposal has dramatic and far-reaching implications, with profound consequences for the future of the accounting profession. If this rule is approved as currently proposed, accounting firms performing audits for SEC registrants might ultimately be prohibited from providing any audit clients with non-audit services.
I am very concerned that this proposal to restrict the services offered by accounting firms represents a fundamental restructuring of a profession that has successfully given investors reliable, independent information for the past century. The accounting profession has played a key role in making our markets the most efficient in the world.
Restriction on non-audit services will likely:
I am concerned that in adopting this rule, you ignore the conclusion of the current Panel on Audit Effectiveness of the Public Oversight Boaard. This panel concluded thatt "both the profession and the quality of audits are fundamentally sound." The panel said it couldd find no evidence that the provision of non-audit services has hurt audit quality. On the contrary, it concluded that in numerous instances non-audit services contributed to a more effective audit. Mr. Katz, this panel was established at the request of the SEC.
Finally, the comment period of 75 days is not appropriate on such a far-reaching and highly complex proposal.
I urge the Commission to eliminate the "Scope of Services" section when considering the final rule.
Attached are copies of letters that I have sent to Members of the Colorado Congressional Delegation for your information.
Timothy M. O'Brien, CPA
Cc: Chairman Arthur Levitt
Commissioner Paul R. Casey
Commissioner Isaac C. Hunt, Jr.
Commissioner Laura S. Unger