September 22, 2000

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

Dear Secretary Katz:

Recently, your organization has proposed new independence rules for auditors. The rules that you are proposing are not based in fact or evidence. In addition, the time allowed seems designed to avoid Congressional oversight and preclude meaningful public participation. In so doing, the SEC has:

• Waited until the eleventh hour of the Clinton Administration to push through a radical rule to restructure the accounting profession, without permitting informed oversight, or policy participation, by Congress or the new Administration. In each of the last 10 annual reports to Congress, the SEC has not mentioned any concerns about the scope of services issue.

• Limited to 75 days the period for commenting on a far-reaching and highly complex proposal, including responding to more than 400 questions, collecting and analyzing a great deal of data and considering alternative concepts for regulating auditor independence.

• Pre-empted the work of the ISB, set up three years ago at the initiative of the SEC to develop a new conceptual framework for auditor independence and appropriate implementing standards.

• Not allowed time for important recent reforms to work, including new disclosure and audit committee requirements adopted by the ISB, the NYSE, the NASD, the American Stock Exchange and the SEC.

Not only is the schedule designed in question, I question the authority to make such sweeping changes in the rules for scope of service. The statutory provisions cited by the SEC in the proposed rule pertain to public companies' filing of financial statements that have been audited by independent accountants and do not expressly authorize the SEC to make rules governing or regulating directly the accounting profession itself.

The proposed rule is based primarily, if not entirely, on alleged concerns relating to the "appearance of independence" - but not independence in fact. The SEC does not have statutory authority to impose restrictions because of possible perceptions about independence.

In conclusion, the proposal to restrict the services offered by accounting firms represents a fundamental restructuring of a profession that has successfully given investors the reliable, independent data they need for the past century.

A decision by a government agency to tell some business organizations what services they may offer and to tell other businesses from whom they can buy services is an extraordinary economic intervention without any empirical or other basis. We think most Americans would find this a curious public policy position for their government to take.

I respectfully request your assistance in helping to stop this proposed change.

Sincerely,

GAITHER RUTHERFORD & CO., llp

Charles W. Rutherford, CPA
CRuther@GaitherCPA.com