August 25, 2000
Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 5th 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:
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.
Darold D. Rath