Intel Corporation

November 22, 1999

Jonathan G. Katz
Secretary, U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: SEC Proposed Rule for Audit Committee Disclosure, File No. S7-22-99 and Proposed Rule Change by National Association of Securities Dealers, Inc. Amending Nasdaq's Audit Committee Requirements, File No. SR-NASD-99-48

Dear Mr. Katz:

Thank you for the opportunity to comment on proposed rule changes for Audit Committees. We have reviewed the rule changes proposed by the National Association of Securities Dealers, Inc. and find these proposals acceptable.

We offer the following comments in response to The Securities and Exchange Commission's proposal for Audit Committee Disclosure:

A. Pre-Filing Review of Quarterly Financial Statements

We support the proposal for an interim SAS 71 review to be performed by the independent auditors. However we believe the inclusion of the auditors' report in the filing of the Form 10Q and disclosure about discussions between the audit committee and the auditors prior to the company's filing are unnecessary. We believe the AICPA's proposed amendment to SAS No. 71 for an independent auditor and Audit Committee discussion as part of the earnings release process is an unrealistic step. It will delay the release of financial results without adding any commensurate value for a company of Intel's size. We already engage tremendous internal resources and expert auditors in the earnings release process and the document goes through many draft stages. The involvement of the Audit Committee would neither improve the process nor establish useful oversight or control. The proposal will only make the process more costly and time consuming.

B. The Audit Committee Report

While we are in general agreement with the proposed discussions under (a)(1), (2), and (3) of Item 306, we believe the proposed disclosures may have a chilling effect on the Audit Committee members' willingness to approve engagement of the independent auditors for non-audit services. We believe this would be unfortunate since using the independent auditors for non-audit, consulting services can be quite appropriate in many cases, such as those where the depth of their understanding of the company's business and their expertise are especially beneficial. Our Audit Committee has maintained an active role in reviewing and pre-approving engagements of our auditors for non-audit services and this has been very effective in helping to maintain auditor objectivity and independence.

The proposals under paragraph (a)(4) are much better than the GAAP certification required under the Recommendations of the Blue Ribbon Committee but do not assuage our concern for the inevitable increase in liability exposure for Audit Committee members with no commensurate value to the financial reporting process. We believe paragraph (a)(4) of the proposed rules will inappropriately shift responsibility of the independent auditors for providing reasonable assurance of the integrity of the financial statements to the Audit Committee, who has neither the extent of information or resources for the investigation and examination to provide such certification to investors. Such certification would be coming from Audit Committee members who are neither part of operational management nor professional auditors or accountants. The added disclosure will result in meaningless information that more likely will serve only to increase the Audit Committee's risk of liability exposure while reducing risks for the expert auditors, in spite of the proposed safe harbor.

We believe a more general disclosure that the Audit Committee, management, and the independent auditors have discussed the results of the financial reporting process should be sufficient to provide assurance to shareholders that the Audit Committee has acted responsibly to perform its oversight duties.

C. Audit Committee Charter

We support the proposal for disclosure in the proxy statement whether the Audit Committee is governed by a charter. However we believe attachment of the charter as an appendix would motivate rewrites of charters to boilerplate or vaguely-worded language that provide limited or little benefit to investors, to reduce litigation exposure and protection against state law liabilities.

We do not believe the Audit Committee should disclose whether it has complied with its charter, materially or otherwise. Such disclosure could result in real or perceived liability exposure and make it more difficult to attract qualified directors for service on the Audit Committee.

C. Disclosure About "Independence" of Audit Committee Members

We agree to the proposal.

D. Proposed Safe Harbor

We strongly support adoption of proposed liability safe harbors to cover the information disclosed under the proposed amendments and believe such safe harbors are necessary. However we are concerned that the safe harbors provide no protection from state law claims or federal antifraud claims and thus will not help motivate qualified directors to serve on the Audit Committee due to the increased liability risks.


Andy Bryant
Senior Vice President
Chief Financial Officer