September 1, 2000
Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20459
(submitted electronically to email@example.com)
Subject: Request to Testify
Re: Comment File No. S7-13-00
Dear Mr. Katz:
The Public Employees' Retirement Association of Colorado (PERA) appreciates the opportunity to comment on the Auditor Independence Rule Proposal at the hearing to be held September 13, 2000 in New York City.
Pursuant to the requirements set out in your release 2000-111 dated August 10, 2000, PERA herein provides a summary of its intended testimony at the referenced hearing.
PERA supports the Commission's initiative to further insure that the outside auditor of a publicly traded corporation is independent and objective in both fact and appearance.
This support stems from PERA's belief that an effective corporate board, and the audit committee of that board, must themselves be independent and objective in governing the corporation on behalf of the owners of the company.
Further, PERA, as a large institutional investor with a significant portion of its domestic equity securities held in passively managed accounts, depends on an efficient and sound market for both the security and the growth of these assets. Independent and objective outside auditors are an essential factor in insuring that the information upon which the market operates is accurate and useful, and is viewed with confidence by the market.
While PERA believes that the specifics of the proposed rule represent positive steps for improvement, we respectfully suggest that an even more effective, and simpler, option would be to require that a firm acting as outside auditor to a corporation not provide any other material services outside the scope of the audit to that corporation during the period of engagement.
Again, PERA appreciates the opportunity to participate in this important process.
George Kim Johnson