August 25, 2000

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 5^th Street NW
Washington, DC 20549-0609

Dear Secretary Katz:

RE: Proposed Rule Governing Auditor Independence; File No. S7-13-00

I am writing on behalf of our Firm, Eide Bailly LLP, and its 600 employees to express our grave concerns with the proposed rule governing "Auditor Independence." If this is enacted in its present form, it will be the start of the demise of the public accounting profession as we now know it.

Our firm only serves a handful of SEC companies; however, rules such as these have a way of becoming the "standard" with State Boards of Accountancy and other federal regulators such as the Department of Banking, Department of Labor, ERISA, etc. In summary, we are concerned about the following possible implications of the proposed rule:

• The rule would force public companies to choose whether to hire a firm as its auditor or as a provider of other services. We believe this would split the accounting profession in half, with some firms choosing to be "audit" specialty firms and others becoming "consulting" firms.

• Because of the above restructuring of accounting firms, it would be extremely difficult to hire quality college and university graduates to work in purely "audit" firms. Students majoring in accounting have already declined by over thirty percent in the last five years and this proposed rule will greatly accelerate that decrease. Based on our experience, we know that a career working solely on "audit services" would not be appealing to the best and brightest accounting students, which would ultimately have the effect of reducing the quality of audit services throughout the United States.

• We provide many of our client services through joint ventures and affiliated arrangements to ensure that our clients receive the highest quality solutions to fulfill their needs. Under the proposed rule, these type of alliances or cooperative agreements could result in each firm being required to be independent of the other firms attest clients. It seems like these restrictions would extend to alliance agreements with not only US firms but International firms as well.

• Even though this proposed rule pertains to SEC clients, past history has indicated that the "trickle down" theory generally evolves and nonpublic companies ultimately are impacted by the same rules. If that happens, many of our clients who are located in non-metro markets would be denied solutions to their "non-attest" consulting service needs. In small markets, there is often only one CPA firm that serves that area. This would drive up costs, as clients would have to seek those solutions from out-of-town service providers, while their local CPA firm may be fully qualified to handle all of their needs.

We are in favor of the proposed rule changes that eliminate discrimination against working women and two-career families. We also believe that the financial-interest standards should be implemented as soon as possible, independent of this scope of service initiative.

We are extremely bothered by the fact that the SEC has apparently ignored the conclusions of its panel on Audit Effectiveness of the Public Over Sight Board, which was formed at the request of the SEC. It concluded that it could find no evidence that the provision of non-audit services has hurt audit quality.

We question why the SEC has adopted the present time schedule for rushing through this radical rule to restructure our profession. The SEC has not allowed time for recent reforms to be implemented including new disclosure and audit committee requirements adopted by various agencies and regulators.

In short, we believe this opposed rule is unnecessary, would not improve services to the public, would ultimately degrade the quality of people attracted to the accounting profession, and would curtail services to clients in more rural areas.

I would be happy to visit with you if you'd like to discuss this matter further or have any questions. Please feel free to contact me at 701-239-8520.

Sincerely,

Darold D. Rath

DDR:csc