From: John.RIEGER@oecd.org Sent: Friday, June 28, 2002 10:12 AM To: rule-comments@sec.gov Subject: Comments regarding POB To the SEC: I commend you for the draft proposed framework of a Public Accountability Board. The recent market events have damaged confidence and without swift action from government (such as the government response in the formation of the SEC back in the 30's) it could take several years before investors return. OECD member and non-member work depends significantly on following "best practices" and often the process used by the United States is the basis for these best practices. I also agree in the concept of avoiding the term "self-regulation", which in today's economic environment should no longer be used in relation to the oversight of the audit function. Some areas to be careful of when preparing the detailed workplan and in the formation of the PAB: 1. Make sure a fair and transparent selection process exists for the members of this board. Credibility has been tainted from both the large political contributions made to parties and the large lobby influence that the AICPA has. I am aware of the problems Mr. Busher had with the former AICPA POB. This should be absent of insider manipulation. 2. PAB reviews on an annual basis do appear frequent enough. However, they should not be limited on the selection process for audit workpaper review. A random statistical sampling to review workpapers will not be adequate since any auditor is able to make the workpapers appear in compliance when the audit is really wrong. Remember the last peer review done on Andersen gave them a clean opinion. 3. Make sure the board selection is fair and mandatory rotation is built into the PAB board to make sure that the board itself does not become made up of "good old boys'; someone who takes a position and never has to leave. This will also help prevent what often happens with oversight boards of them becoming simply special interest organisations with a self serving role or becoming ineffective. 4. Registration to the PAB should require certain reporting requirements from the audit firm. The PAB should be looking at the Corporate Governance of the Audit firm. The SEC has focused a lot on the Corporate Governance of listed companies but there is little responsibility on the audit firms to protect from tainted goals and objectives. 5. Please be aware that while the big 5 (final 4) are global, they really operate often only in name outside of the US. This is why Andersen's other offices could so quickly leave the system. This is something that also needs to be considered on oversight since the PAB will not have legal authority on those offices that are performing the audit of the activities outside of the United States. 6. As certain reviews have proven, the structure should be set up to encourage other audit firms to participate.It should not be assumed that only the big 4 have the license to audit. The PAB should be set up so not to exclude audit market competition and participation. There already are those concerned with the current audit oligopoly. John R. Rieger CPA Principal Administrator Financial Transparency OECD 2, rue Andre'-Pascal 75775 Paris Cedex 16, France +33 (0) 1 49 10 42 80 +33 (0) 1 49 10 43 53 fax john.rieger@oecd.org www.oecd.org/daf/corporate-affairs/