207 BOB ROLLINS RD.
FOREST CITY, NC 28043
The SEC's proposed rule Governing Auditor Independence provides no evidence that non-audit services have compromised audit quality or auditory independence, nor ever caused an audit failure. No evidence was provided by the studies of the SEC that the scope of services impaired audit effectiveness, or that an exclusionary ban was necessary or appropriate.
The proposed rule would set a precedent for other regulators. Even small accounting firms, such as mine, 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 agencies.
CPA's working in industry would experience an adverse impact from the SEC's rule; the rule would restrict public companies' freedom of choice when seeking outside professional services. Companies would be forced to constantly choose whether to hire a firm solely as its auditor or solely as a provider of other services. A company might be forced to dismiss an audit firm that has consistently done outstanding work in order to obtain services for the auditor's non-audit colleagues.
Accounting firms would be precluded from entering into almost any joint venture or partnership, since the accounting firm's independence could be impaired as a result of the activities of other parties in which it may have only an immaterial investment.
Regional alliances or cooperative agreements between accounting firms could result in each firm being required to be independent of each other firm's attest clients.
The SEC's proposal to restrict the services offered by accounting firms represents a fundamental restructuring of a profession that has successfully given investors the reliable, independent service that they require. CPA's have traditionally monitored their activities to preclude a lack of independence from any attest services they might offer their clients. It is not necessary nor is it desired for the government to step in and regulate an organization that has already regulated itself in a manner consistent with that of good business practices.
This scope of services rule must not be allowed to go forward.
Beth Sitton, CPA
August 16, 2000