Bambeck & Associates of GA, LLP
September 20, 2000
Re: File Number S7-13-00
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549-0609
Dear Mr. Katz:
I am writing to you to express my concerns over the limitations on the scope of audit services rule currently proposed by the SEC. Even though our firm has only two licensed professionals and no SEC clients, I fear that the effects of this rule would be far reaching enough to adversely affect our profitable business lines. Based on the concerns listed below, I ask that the scope of services rule not be allowed to go forward.
The SEC has based its decision to move forward with this rule prohibiting non-audit services without facts or evidence. Even the SEC admits that there is no evidence that non-audit services have compromised audit quality or auditor independence, nor ever caused an audit failure. None of the studies or reports cited by the SEC concluded that the scope of services impaired audit effectiveness, or that an exclusionary ban was necessary or appropriate.
The SEC ignored the conclusion of the current Panel on Audit Effectiveness of the Public Oversight Board. The Panel concluded that, "both the profession and the quality of audits are fundamentally sound." The Panel said it could find no evidence that providing 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.
Most dangerous to those of us in small practices is the likely prospect that the proposed rule would set a precedent for other regulators. Even our firm with no SEC clients could be impacted by these new rules. The proposed SEC rule would be viewed as the new model by state boards of accountancy, as well as federal and other regulators.
A substantial portion of our practice is tax related. The SEC claims its proposed rule "would not affect tax-related services" to audit clients. However, it would ban acting as an advocate for an audit client, or providing expert services in administrative proceedings, thus potentially prohibiting CPAs from representing audit clients before the IRS.
In conclusion, the SEC's proposal to restrict the services offered by accounting firms represents a fundamental restructuring of a profession that has consistently supplied investors with reliable and independent data. This proposal has far reaching effects especially to those with smaller practices that depend on all of our business segments, including auditing, to remain profitable. Once again, the scope of services rule must not be allowed to go forward.
Very truly yours,
Thomas M. O'Connor
12145 Magnolia Circle · Alpharetta, Georgia 30005
Phone: (678) 297 - 0897 · Fax: (678) 297 - 3879