Comments on Proposed Rule:
Revision of the Commission's Auditor
Independence Requirements
[Release Nos. 33-7870; 34-42994; 35-27193; IC-24549; IA-1884; File No. S7-13-00]
Author: "Larry Baggs" at Internet
Date: 09/09/2000 10:22 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. 57-13-00
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Hey sec:
Please give us some protection that will help guarantee the integrity
of information presented in company audits.
I'm just a little guy reaching 50. I make under 25K and have only a
few thousand in a portfolio. I pick my own stocks and try to do my
own research, so I depend on the accuracy of the audits and other
information out there. I almost bought Waste Management last year
because of the auditor's rating. The little guy will be hurt most
everytime such misleading evaluations are given because 1) we have
little option to determine the truth and 2) we lack the deep pockets
to protect us from what amounts to fraud.
I won't have a chance at some kind of retirement/security if I am held
hostage to white collar dishonesty--for that is what it is when an
auditor rating a company depends on the same companies for consulting
fees.
It doesn't take too much common sense, regardless of what the
"auditors" may be saying, to realize that their integrity is
compromised at the very least or that some auditors would be downright
dishonest in their evaluations of companies from whom they receive
other remuneration.
Larry Baggs
Author: "Fred Baldwin" at Internet
Date: 09/09/2000 8:35 AM
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TO: RULE-COMMENTS at 03SEC
Subject: 57-13-00
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With respect to the separation of the audit and consulting conflict of
interest issue, I support the SEC. I have been a conservative investor
throughout my working career. About 90% of my retirement income comes from
investments. I would not consider any regulation too severe that would
protect me from these predators. A young man could possibly withstand an
occasional sting, but a retired person would probably have to alter his
lifestyle dramatically.
As an retired executive I've seen greed manifested on many levels.
Apparently these kinds of crimes don't weigh heavily on the average
conscience because the consequences are blurred in the distance. The
consequences are however serious and real - especially with publicly traded
companies in the poertfolios of retired persons.
Give'em Hell!
Gratefully,
Fred Baldwin
Anaheim Hills, California
Author: at Internet
Date: 09/09/2000 12:12 PM
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Subject: Separation of Audit and Consulting functions; File No. S7-13
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Gentlemen:
To require service providers to establish separation between audit
departments and those elements supplying consulting services does not impugn
the integrity of existing companies. This requirement would remove the
appearance of possible fraud and would make it more difficult for fraud to
occur and could make fraud easier to detect.
However; establishment by the S. E. C., of this separation would not prevent
fraud.
As an investor, I favor establishment of separate ownership of consulting
services from the ownership of audit services but not by fiat. A first step
toward a rational response to the perception of this possible problem would
be to provide broad publicity. If investors become generally aware of the
increased opportunities for fraud within those service providers where these
functions are owned in common, it is likely that a market response separating
the functions will occur. Then, if there is not a market response and if an
actual fraud occurs, further rules could be considered by the S.E.C.
Sincerely,
F. W. Ballou
637 Fairfax Way
Williamsburg, VA 23185-8204
757-220-3922
email fballou757@aol.com
Author: at Internet
Date: 09/09/2000 10:52 AM
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TO: RULE-COMMENTS at 03SEC
Subject: simply put
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i am in favour of auditor independance and suppotrt the SEC in their efforts
to make it the law.thank you for the full disclosure ruling though i have to
date lost over 60% of my personal investments in the stock market the
clensing of the market is indead in order .if we are to be a beacon to the
world of what free enterprise can do for a free people.democercy must not
only encourage the free spirit to invest but must also keep the playing field
clear of posible abusises using a heavy hand to punish those who would treat
its citicens with the disrespect of a carnival barker hawking fraudlent
goods,services to the unwarry public.the idea of equal and free ought in my
oppinion imply equal access to pertnent information when such represents no
threat to national security.free ought to represent the honest sincere open
choices offered to a free people baised upon the lawfull engagement of the
free enterprise systen .witch can only be ensured when those who would
repeddely committ acts wich violate the public trust are punished buy the
loss of the right to engage in all activity withinn the financial world .
thank you for your time . sorry for my
long winded disertation Louis
Bonaldi
Author: "stephanie" at Internet
Date: 09/09/2000 10:21 AM
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TO: RULE-COMMENTS at 03SEC
Subject: I support the separating of auditing and consulting services
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I am an individual investor, age 49, with a strong sense of justice and
fairness. From what I've read on this topic, it appears that the public is not
served well when auditors collect more money from their consulting services to
the same firms they audit.
I hope you pursue a new rule to separate these services.
I am greatful to you for the recent ruling on selective disclosure.
Very truly yours,
Stephanie Carleton, RN
50 Dundalk Drive
Pittsburgh, PA 15235
Author: LARRY CARYL at Internet
Date: 09/09/2000 11:36 AM
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BCC: RULE-COMMENTS at 03SEC
TO: rule-comments@sec.com at Internet
Subject: File No. S7-13-00
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For a long time I have objected to Auditing firms providing
consulting services to the clients they audit. It may be
impossible to prove but there is an inherent conflict of
interest and Auditors should be banned from providing
consulting service to their clients. Let them mess up
clients they don't audit.
L.G. Caryl
Author: "Jane" at Internet
Date: 09/09/2000 9:34 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Hello,
I read the article on the work of the SEC sent by Fool.com, Are Auditors
Independent, by Bill Barker. I would like to voice my support for the work
that the SEC is doing. With investing increasing at previously unknown
rates, protection is essential. Continue your work, SEC!
Jane Deers
Author: "Les Dennis" at Internet
Date: 09/09/2000 1:33 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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SEC:
I believe that you are correct in trying to halt the practice of allowing
accounting firms to both audit and consult within the same client firms. It
is obvious to me that such practice would most probably lead to
improprieties and/or fraud due to the human nature tendency of greed.
Please go ahead and implement this new rule proposal.
Lester J. dennis
dennisles@earthlink.net
Author: at Internet
Date: 09/09/2000 2:37 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Independent auditors
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Dear Sirs:
Anyone who has worked with an auditor realizes that under the best of
circumstances the audit is apt to be compromised from the prospective of the
stockholder's interest. Management too frequently has interests that are not
parallel with the stockholder -- and has the working relationship with the
auditor. If both the auditor and management has self-interest rather than
stockholder interest at the forefront, let the stockholder beware!
In my opinion, this SEC idea is right on target with this idea. I would not
allow the "Independent Auditor" to have any other relationship with the
Corporation.
Thank you for the opportunity to make comments on proposed rules.
B. L. Earle
13064 Harrisburg Court
Chino, CA 91710
P.S. Am currently on a long driving trip across the country and will not be
home until about Nov. 1st. Until then, e-mail is my contact.
Author: at Internet
Date: 09/09/2000 1:09 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Greetings,
I've been working in business for more than twenty years now, and I know that
conflicts of interest such as those between the auditing and consulting arms of
a business exist. They can be managed very quietly, verbally only, where no
evidence exists.
I would greatly like to see auditing business separated from consulting
businesses.
Sincerely,
Kent Erickson
54 Mystic Lake Circle
Woodlands, TX 77381
Author: Mary Fink at Internet
Date: 09/09/2000 10:55 AM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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TO WHOM IT MAY CONCERN:
As an individual investor, the numbers that I MUST rely on from various
companies should be RELIABLE--not tainted by auditors whose
self-interest is obvious. I encourage you to "stick to your guns"
regarding this issue and be forthcoming with rules which should prevent
the tainting of audits by auditors who are acting as consultants with
one hand and auditors with the other. I speak for hundreds of
individual investors whose only source of information often is
questionable audits set forth as valid by companies who pay large sums
to their auditors for "consulting services.". Thank you, Mary Fink, 320
Lightning Ranch Road, Georgetown, Tx. 78628
Author: samf at Internet
Date: 09/09/2000 12:14 PM
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TO: RULE-COMMENTS at 03SEC
Subject: file no S7-13-00 -------------auditors uncompromised audits
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In relation to file no S7-13-00 as an individual investor i
would like to see companies that audit publicly traded firms
be allowed to do audits or consulting for said companies, BUT
NOT BOTH.
My confidence in the audits is greatly decreased by knowing that
the same company is or could be doing consulting work for the
company they are auditing.
Please let me know that you have received this imput.
Sincerely,
Samuel Fleishman
6830 Hayley Ridge Way #N
Baltimore, MD 21209
410.486.9778
samf@bcpl.net
Author: Reed Gelzer at Internet
Date: 09/09/2000 7:36 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File Number S7-13-00
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Sirs/Ms.:
I noted recently on the Motley Fool web site that
you are looking into the conflict problems created by
auditing firms that also offer consulting services.
Obviously this is just one person's opinion, but
this one person has approximately $600,000 of his own
in the equities markets, and is co-trustee for
accounts totalling another $650,000. I can tell you
that after the Laidlaw and Rite-Aid messes, I greatly
reduced the assurances I draw from external audits.
Furthermore, I believe that the marketplace may be
destabilized as investors see the deterioration of
confidence in external audits-becoming even more
likely to flee a stock on mere hints of financial
improprieties. The stability of markets ultimately
relies on some level of confidence in the honesty and
fairness of the marketplace. As the weakness of the
policing functions becomes more apparent, confidence
erodes and, at the margins, investments are
redirected. Consider for a moment what will happen to
the US economy if just 2 or 3% of foreign investors
shift their monies to Europe or Japan as confidence in
the US equities markets erodes.
The great thing about being in a policy-making
function is that you only need a reasonable argument
for policy, not absolute proof, to make a change. As
said so well by John Bogle, founder of The Vanguard
Group and index fund investing:
"Of course there is no clear evidence on this
subject, but [the] proposal says very aptly [that]
studies cannot always confirm what common sense makes
clear.... The stakes are high, and when consulting fees
come to be many times more important than audit fees,
it just must be obvious to anybody that independence is
clearly likely to be impaired. I know it's subtle. I
know it's a state of mind. But when self-interests
predominate, trouble comes not far behind. And it seems
to me it comes into special focus as a profession
becomes a business."
Best of luck in your deliberations.
Reed D. Gelzer
424 N. Main St.
Wallingford, CT 06492
Author: Dave Harnett at Internet
Date: 09/09/2000 7:45 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00. Auditing must be separate from consultin
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The SEC is correct in being suspicious of auditors doing consulting work
for their clients. To correct the situation is easy... make an SEC rule
against such practices. An Auditor must audit for a company and that's
it!! Mr. Bogle of Vanguard said it all. It's just plain too suspicious
to allow auditing and consulting by the same company and expect he
auditor not to be PERHAPS swayed by the dollars of consulting. Auditors
must be above suspiction.
An independant investor thanking you for listening
David Harnett
1605 Columbia Ave
Port Royal SC 29935
harnett@gosiggy.com
Author: "joan harpold" at Internet
Date: 09/09/2000 5:58 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditors Objectivity
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To All Concerned:
I have been following this subject for some time want the SEC to take all
measures to insure objectivity from auditors. Please keep the public
informed on all matters regarding this subject. Never before has this been
of utmost importance to the individual investor.
Thank you,
Joan Nailling Harpold
Member of NAIC
Author: "Dennis & Stacy Hartlaub" at Internet
Date: 09/09/2000 10:52 AM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditors need to be independent
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As a small investor I need to know the numbers of a public company are
correct/ legal. I believe that all auditors should be independent and
arm-length in all dealings with the company being audited. I also believe
each and every employee of an auditing firm should own no stock in the firms
being audited. Please also install strong punishment for firms breaking rules
regarding public information numbers.
Sincerely,
Dennis Hartlaub
Author: Bob Haynes at Internet
Date: 09/09/2000 3:22 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Comments on Conflict of Interest in the Accounting Professio
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The whole concept of an accounting firm being employed by a company (I
am speaking only of public companies) and giving impartial judgments
concerning the company's financial status is flawed and represents a
continuing conflict of interest on the part of the accounting
profession. This conflict is, I believe, even more significant than the
supposed conflict between accounting and consulting.
If the auditing results are too negative (reflecting the reality of the
company), the accounting firm will not be re-employed by the public
company the following year. There have been many examples of companies
changing auditing firms because they are not happy with the results.
Therefore, the accounting firm is forced (in the interest of growing its
business) to mollify any negative findings found during audits so as to
be re-engaged next year.
My solution would be as follows: Since the public company benefits from
access to public funding, one of the costs of being listed on an
exchange would be a payment to the exchange for annual auditing. The
exchange would hire the accounting firm conducting the audit and report
its results without fear that any negative reports would negatively
impact its ability to be rehired next time.
I believe this would eliminate the inherent conflict of interest
currently extant in the world of auditing.
Bob Haynes
Author: at Internet
Date: 09/09/2000 2:03 PM
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Subject: File No. S7-13-00
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Sir,
As a small investor I wish to protest about Auditing firms performing
consulting and other work, which, through generic conflict- of- interest
negate the credibility of related audits. I feel these activities tend to
return the markets to the pre-crash days of 1929 when it was a theme song "
Heavens knows anything goes". I feel with Mr Bogle this is a sad commentary
on our times.
Yours Sincerely.....J.Hillan.
Author: at Internet
Date: 09/09/2000 11:52 AM
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TO: RULE-COMMENTS at 03SEC
Subject: s7-13-00
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It is essential that auditing be independent of the influence of money made
from consulting. For the SEC to require any less defeats the very purpose of
government regulation. Sincerely, Sara M. Hohe - a government lawyer and
investor
Author: "Chris Jenkins" at Internet
Date: 09/09/2000 1:58 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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I am a retired audit partner with a Big 5 firm. I support your efforts to
strengthen auditor independence and believe more needs to be done. If you are
interested in another point of view, please contact me at this email address or
at 561 219-9419.
John C. Jenkins
Author: Kate Kinney at Internet
Date: 09/09/2000 9:13 AM
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TO: RULE-COMMENTS at 03SEC
Subject: independent auditors
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In your upcoming decision about independent auditors, I, as an
individual, private investor would like to offer my brief opinion. I am
an independent bookkeeper and so have seen the many ways in which
financial statements can be played with to make a company look like the
owners want it to look. Therefore, I feel very strongly that it is your
responsibility to insist on independent auditors for publicly held
companies.
Sincerely,
Kate Kinney
Author: at Internet
Date: 09/09/2000 1:31 PM
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TO: RULE-COMMENTS at 03SEC
Subject: Conflict of Interest by Auditors
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To Whom It May Concern,
As an individual investor, I believe it is a major conflict to have auditing
and consulting done at the same company by the same firm.
There is too much temptation for auditors to be influenced by large
consulting fees or the opportunity for large fees.
We depend on totally honest auditing information to make informed investment
decisions.
Joe Kirby
Ravens Wing Enterprises
Author: Viv & Goran at Internet
Date: 09/09/2000 8:27 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Gentlemen,
I believe SEC Chairman Arthur Levitt is bringing up an extremely
important issue. The mere possibility that audits may not be 100%
objective is reason enough to toughen the rules and keep accounting and
consulting services separate.
I am a small private investor with no connections to auditing and
accounting firms. The interests of people like myself should clearly
take precedence over those of the accounting firms.
Thank you
Goran LindeOlsson
118 Stephensburg Road
Port Murray, NJ 07865
Author: at Internet
Date: 09/09/2000 7:25 AM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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As an individual investor, I feel strongly that the SEC should pursue the
goal of separating auditors' professional obligations to independently review
financial statements from their business interest in representing clients as
consultants. I agree with the statements made by John Bogle that raise
concerns over a situation that, even without the kind of firm evidence courts
would like to see, compels one to suspect a serious and inherent conflict of
interest.
I also wish to thank the SEC, and especially its chairman, Arthur Levitt, for
so ably defending the rights of individual investors in the matter of
selective disclosure. I firmly believe that such conduct on the part of the
SEC goes far in maintaining public confidence in the stock market.
Thank you for taking the time to read and consider my thoughts.
Sincerely,
Mary Beth Loup
428 Schoolers Pond Way
Arnold, MD 21012
Author: "Frederick J. Martin" at Internet
Date: 09/09/2000 7:53 AM
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Subject: S7-13-00
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Dear Colleagues:
It would be instructive to observe the present cases being examined in
Europe and those of the recent past. This would allow a public case to
be made for separating audits from business consulting services without
disclosing protected information from settlements in U.S. courts. It
would be useful for educating the electorate even though such
information may be useless in court here.
Some of our firms have become notorious overseas. In Germany, the joke
is: KPMG stands for Keiner Prueft Mehr Genau, or they can't get it to
come out right anymore.
As to business factors, no business person in their right mind will give
up outside audits, most especially the leaders of public companies.
That business seems secure to me. The consulting business grows as more
firms outsource specialist services. Today, this reaches down into
personnel and finance organizations, which may be replaced entirely
through outsourcing their work. I look for this to grow as more and
more businesses become end-to-end electronic business enterprises.
Tomorrow's CFO may not have a department to manage, just some contracts.
The mixed auditor - consultant firms will not suffer unduly from having
these functions separated. There is enough new business in the world to
sustain them as separate entities.
Frederick J. Martin
Export Program Manager
Anteon Corporation
Author: "Bettina B. Menzel" at Internet
Date: 09/09/2000 9:07 AM
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Subject: Independence of Auditing and Consulting Services
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Without question, the financial company or auditor that audits a public business
should be DIFFERENT from the financial company/auditor that providews that same
public business consulting services. Otherwise there is a clear and undeniable
conflict of interest.
In the broad scheme of things, the accounting firms providing these two services
will neither gain nor lose money, because these public businesses will in toto
still have the same net number of audits and consultations. It is just that the
service providers will be jumbled around to some extent, and for good and
sufficient reason.
Also, overall, American public corporations in general will benefit. A huge plus
for American financial and investment markets compared to those of foreign
countries is that the SEC does such a good job of keeping things honest and
above-board and on the up-and-up. Investors feel safe investing in American
companies. But this is no time to rest on any laurels when there is still more
to be done, and something so obvious as dis-allowing an accounting business from
providing both auditing and consultative services to the same publicly traded
corporation.
Please disallow this conflict of interest. In the long run, it is a good thing
for all concerned.
And thank you for banning selective disclosure.
Sincerely,
Bettina B. Menzel
371 TVA Road South
Bristol, TN 37620-0321
bbmenzel@3wave.com
(423) 878-5875
Author: at Internet
Date: 09/09/2000 2:27 PM
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Subject: File No. S7-13-00
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File No. S7-13-00
I support the SEC position to separate require separate consulting and
auditing for public firms.
Having worked in IT management at some fairly large companies, I can give
you an example of a typical relevant discussion.
"Management wants us to use E&Y for our IT consulting, because they want
some leeway on the accounting side."
I heard almost the exact same comment about Price Waterhouse, when I worked
for a different company.
That doesn't mean that the Big 5 firm was unduly influenced, of course, nor
that the Big 5 firm did any worse job in the IT consulting than any other
firm would have. But in the E&Y situation mentioned above, E&Y landed IT
contracts worth millions of dollars, on a project which was ultimately
cancelled. The Chairman of our firm ended up in jail, the CEO was fired, and
the CIO was promoted for some reason. E&Y escaped censure, but you have to
wonder if the situation would have been uncovered quicker if E&Y had not had
the risk of losing a big IT contract.
In summary, my experience in 2 different public firms validates the SEC's
concern.
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George Merkle
george.merkle@omnialert.com
(210) 342-6161x315
Author: at Internet
Date: 09/09/2000 9:41 AM
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Subject: Auditors
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We feel that auditors should not have a dual interest in companies that they
audit. That is, we think that auditors should not serve as advisors for
companies that they audit.
While there may be no clear-cut "smoking gun" to indicate that such a
potential conflict of interest has often (or ever) resulted in inaccurate
accounting practices, the temptation is great and should not be allowed.
Yours truly,
George & Virginia Meyer
Author: "Michael Miller" at Internet
Date: 09/09/2000 12:52 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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To whom it may concern:
It has come to my attention recently that the SEC plans to address an issue
called "Auditor Independence", a title which will probably not attract the
general public's attention. As an individual investor and recent student of
Accounting I am extremely interested in this issue. Having begun a program in
long-term equities investing recently, the Audited Reports companies are
required to submit to the SEC are of the utmost importance to me. If these
reports are of questionable veracity, what source of financial information is an
investor to trust? From my study of current GAAP, the book's first chapter
states:
"...the accountant must act with integrity, even to the sacrifice of personal
benefit. Integrity means that the accountant is honest and candid, and
subordinates personal gain to service and the public trust. The accountant must
also be Objective. Objectivity means that he or she is impartial and
intellectually honest. Furthermore, the accountant must be Independent.
Independence means avoiding all relationships that impair or even appear to
impair the accountant's objectivity." page 26. ( Principles of Accounting
seventh edition, by Needles, Powers, Mills, and Anderson).
I think the word "accountant" could be substituted by "accounting firm" in the
above. As I understand the situation you are investigating and attempting to
control, accounting firms who are doing a company's audit are also providing for
profit consulting services to the same companies. Based on the above mentioned
definitions, there is no question whatever in my mind that the activities of
auditing and fee based consulting must be totally separated. To not do so will
almost certainly erode the public's trust in the audited financial statements of
companies as listed by the SEC and will call into question the basic integrity
of the accounting profession.
I wish you the best in pursuing this matter,
Sincerely,
Michael J. Miller
mailto:mmiller@sopris.net
Author: "Steph" at Internet
Date: 09/09/2000 10:48 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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As you evaluate the feedback regarding the separation of accounting and
consulting services, I would like to add another voice to the din. I feel
strongly that the two functions should be separate and that you are correct in
your pursuit of auditor independence. As an individual investor, I need to feel
secure that financial information has been independently and thoroughly prepared
and that it is not compromised by the lure of other business.
Please continue to pursue this issue on behalf of other investors and myself.
Thank you.
Stephanie Olivier
3854 Montecito Avenue
Santa Rosa, CA 95404
stepho@cableone.net
Author: at Internet
Date: 09/09/2000 8:57 AM
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TO: RULE-COMMENTS at 03SEC
Subject: Auditor Independence
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I have heard that auditor consulting services are under investigation as
affecting auditor independence in doing the audit. I admit that I don't trust
an audit report if the auditors give a great deal of consulting service to a
client. Some amount has to exist because so much inefficiency can be observed
and experienced during an audit. Full disclosure is an easy start but then it
gets hard.
Joe Pitzinger
Dallas, Texas
bevers@aol.com
Author: at Internet
Date: 09/09/2000 1:50 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File NO. S7 - 13 - 00
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Gentlemen and Ladies,
I want honesty and ethics in business (and I believe we have a right to
expect that) - particularly where my investments are concerned. After all I
worked long and many years to garner funds for retirement such that I don't
want accountants playing shell games with their audit responsibilities thus
shortchanging me on information I'm using to make intelligent investment
decisions . How can they possibly believe that's acceptable business
behavior simply in order to protect their stake in those most attractive
consulting fees?
My father, who in my opinion was the savviest, most honest, intelligent
accountant on the planet when he was alive, would turn over in his grave!
Sincerely,
Jessica M . Putney
thor: at Internet
Date: 09/09/2000 9:18 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Dear SEC:
First, thank you for your ruling on the selective disclosure issue on behalf
of us individual investors.
I would like to add my voice in support of Auditor Independence and the
problem of non-audit consulting services.
Please continue your good work in support of full disclosure and transparency.
Thank you,
F. Rabell
An individual investor
AuAuthor: "Richard Richardt" at Internet
Date: 09/09/2000 1:35 PM
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TO: RULE-COMMENTS at 03SEC
CC: "Richard C Richardt" at Internet
Subject: File No. S7-13-00
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Dear Sirs:
I hope you make Auditor Independence a reality in our business world.
I can't see how auditors can have an impartial approach to a company's books if
the auditing firm also has another business relationship (like consulting) with
the audited company.
Let's keep things fair and remove all temptation to bias on the part of the
auditing firms. This is in the best interests of all investors.
Rick Richardt
rcrichardt@dellnet.com
Author: at Internet
Date: 09/09/2000 10:34 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File S7-13-00
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I, for one small investor, have wondered about this issue. However, I have
never heard of it being addressed before.
Thank you for your efforts to keep investing in the markets more open and
fair.
Sincerely,
Joy Des Rosier
Author: Melvyn Schupack at Internet
Date: 09/09/2000 9:20 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File # S7-13-00
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As an individual investor I urge that you provied for full auditor
independence by separating accounting firms from consulting firms. There
is a clear conflict of interest between the two functions and we need
assurance of a complete separation of the two. Please act before even
one case surfaces with incontrovertible evidence since then it will be
much to late and that would be only the too-late tip of the iceberg.
Since, as I understand it, most cases are settled out of court and
records sealed, it will be important to act now to protect all
investors.
Thank you.
Sincerely,
Mel
Schupack, MD
Author: Kathryn E Sheffer at Internet
Date: 09/09/2000 7:12 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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We have a first hand example here in Arizona where the Arizona Baptist
Foundation is in the throws of trying to clean up the mess that was
allowed because the 'big 8' accounting firm doing the audit 'didn't' or
'couldn't' keep all the things straight. A lot of people are losing life
savings and IRAs and a lot of lawyers are getting fat fees because of
this mess. If the audits had been done correctly, I don't believe the
Foundation could have pulled this off. But, it happened and now a lot of
little people are hurting. I don't know what, if any, consulting fees
were paid to the accounting firm, but the whole thing smells to me.
Kathryn Sheffer
Computer Library, Inc.
www.computerlibrary.com
Author: at Internet
Date: 09/09/2000 7:37 AM
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TO: RULE-COMMENTS at 03SEC
Subject: Comment on File number S7-13-00
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Dear Sir:
I have been reading about a situation that exists which could have very
serious consequences for all of us. That being that accounting and consulting
done by the same firm on certain publicly traded companies is possibly.
compromising the integrity of the audit side of the equation. This of course
could have devastating consequences if it gets out of hand. We all understand
the human nature and the temptation of an accounting firm to put a profit
ahead of other responsibilities is entirely possible.
I want to tell you that I hope there is something the SEC can do to try to
guarantee that the public and the investors are protected here. Possibly
requiring the use of two firms and not two firms owned by the same entity to
perform the accounting and consulting. In any case I support your efforts to
remedy this situation and wish you the best of luck in your endeavors.
Sincerely,
Bill Shreck
Pullet1 @ aol.com
Author: Elizabeth Smith at Internet
Date: 09/09/2000 9:33 AM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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To members of the SEC;
Thank you for the opportunity to comment on the subject of auditors'
relations with the companies being audited. I am a very small investor
who has no business experience , but I have become interested in
investing in my retirement. My small portfolio has done very well due to
this longrunning economic boom but I realize one must research one's
choices extensively. The lessons and philosphy of The Motley Fool have
been helpful. Their recommendation is to study the numbers; but if the
numbers are not completely reliable, we're in trouble. In my work life,
I dealt with a national consulting firm of auditors which was hired to
assess the most efficient way for a department to meet it's client's
needs. That department was outsourced and ,surprise! the auditing
firm's subsidiary was chosen for the contract. This experience has led
me to some skepticism about the ability of such firms to fully separate
their lines of business. I hope you will continue to support rules which
will result in truly accurate information from auditors. Thanks for all
your good work. Sincerely, Elizabeth B.Smith.
Author: "Kathy_Sullivan" at Internet
Date: 09/09/2000 10:35 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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I would like to add my comments to the Auditor Independence discussion that
is currently under review. I am an individual investor, both of stocks and
mutual funds. It is imperative above all, that financial audits of companies be
as thorough and free from any outside influence or conflict as possible. I
wholeheartedly support a new rule that would bar accounting and consulting firms
from providing these services to the same companies that they are also auditing.
Thank you for your taking the time to consider my opinion.
Sincerely,
Kathleen Sullivan
12747 Regal Pine Lane
Houston, TX 77070
Author: K at Internet
Date: 09/09/2000 10:30 AM
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TO: RULE-COMMENTS at 03SEC
TO: vice.president@whitehouse.gov at Internet
Subject: Strangle To: Arthur Levitt "Quandry on Information availabil
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As an individual investor, I am finding that information about the
market and economics is pretty much kept secret by large institutional
handshake deals with big business until the value of the information is
no longer an edge... then it is made available via the normal
distribution paths. (Journals, TV, AP, UP) Which is just tooooo late.
Is timelyness a commodity for the rich only???
Noooooooooooo.
As examples:
1. Inexpensive stock market Real Time Volume is not generally
available. Why??? Price too, but not as difficult to find. Internet
solutions are needed.
2. Common point and time of distribution of real time factual
information that affects the market is needing to be dealt with. I
would like equal access to Govt reports, earnings warnings,
company/industry specific market moving news. (perhaps distributed
during non market hours on govt news wire, non biased tv channels etc
). Heres an idea...... whisper numbers wouldnt be wisper numbers if
the information was allowed to be presented all along by non licensed
writers as "forward looking discussion." Let concensus build. Wheres
freedom of press?? And Yes, fraud is punishable, but not until the
crime is commited.
The current SEC rules appear to have a bias to suppress forward looking
information and support only historical information. (Arguable but is
preception) eg. licensed vs free press.
I would argue that suppression of forward looking information and
discussion is "real bad".
I would propose that the information being distributed state that it is
"forward looking" and that it is presented as discussion only, this is
for anybody not just CEOs and licensed brokers.
I am concerned for the individual investor who doesnt have the vast
resources to research the future by himself (being that he/she probably
has a day job, kids etc).
This is all a major problem for at least two reasons.......
1. If 25% of social security will be individually
investable.....under the current SEC system they will loose it. This
is contridictory to the goal of retirement wealth.
2. Unless information is freed up Capitolism will be lead by a
Dictatorship of a few brokerage institutions who control it, and this is
not good. For example note when a brokerage house makes a
determination of ....... Did/didnt meet expectations and the stock
price is quickly adjusted..... there was no shareholder consensus here,
and what about undue influence. Yeah this is a problem that needs
attention.
The truth shall ring loud and clear around the world.
Please help to create a better America.
Thanks
Kevin Surber
1726 C Ave NE
Cedar Rapids, Ia 52402
319-247-2707
Author: "Richard J. Svertz" at Internet
Date: 09/09/2000 8:03 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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I am very concerned about auditor independence. How can a firm which reaps huge
profits in consulting fees from a corporation give the same corporation an
unbiased audit?
Please pursue this with all diligence.
Thank you for protecting the individual investor,
Richard J. Svertz
Author: "Thayer; Bruce (B.P.)" at Internet
Date: 09/09/2000 1:19 PM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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Dear SEC,
I just read about the "Auditor Independence" regulation that the SEC is
pursuing. I just want to voice my opinion that I support the position the
SEC has taken. An auditor with any other vested interest in, or business
with, a company they audit cannot be expected to be totally unbiased. As an
individual investor, I believe the SEC is absolutely correct in taking
action to protect the investing public that stands to lose so much due to
corporate greed and the power to hide, or fail to disclose, the kinds of
things an independent auditor is charged with finding and revealing. Please
continue to pursue this regulatory action.
Sincerely,
Bruce Thayer
Author: "Paul Tucci" at Internet
Date: 09/09/2000 11:05 AM
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TO: RULE-COMMENTS at 03SEC
Subject: S7-13-00
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I am writing in to express my opposition to the proposed SEC rule prohibiting
non-audit services to CPA firm's attest clients. My office serves smaller SEC
registrants who require considerable assistance in order to comply with the SEC
reporting rules. The rule proposed by the SEC will significantly impact our
ability to provide this service which benefits the SEC, the client and the
investing public.
Small registrants, such as our clients do not have the financial resources to
hire the experts necessary to comply with the myriad regulations provided by the
SEC and other regulators. They rely on the CPA firm to assist them in these
matters and complying with the regulations.
Segregating the audit function and other relationships needed to comply with
regulations will be a next to impossible task for these small businesses. CPA
firms will refuse to provide audit services or require significant fee increases
because of inefficiencies caused by these regulations.
These rules will create a burden on small registrants and ultimately the
investing public, who the SEC is assigned to protect. Please note my strong
opposition to this pointless rule.
Very truly yours,
Paul T. Tucci
Author: "Ken Updegrave" at Internet
Date: 09/09/2000 7:29 AM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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As an investor and a North Carolina CPA, I think that the independence issues
for auditors do become very blurred when the auditing firm does consulting
engagements for the same client. When a firm has an interest in both
engagements it is difficult to have objectivity and independence in fact and
appearance.
Ken Updegrave
1225 Chaney Road
Raleigh, NC 27606
(919)-852-0253
Author: at Internet
Date: 09/09/2000 12:15 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No S7-13-00
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As an individual investor in the US stock market, I feel strongly that
Auditors should be independent from consultant services.
I am a retired engineer, and cannot believe that auditors would be strictly
independent if consulting fees could be at risk. The consulting business,
whether accounting, engineering or other professions is built around "Good
Ol' Boy" networks and Auditors should be independent of this influence.
James D. Walker
823 Valence St.
New Orleans, LA 70115
Author: "James Walterhouse" at Internet
Date: 09/09/2000 2:04 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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Dear Sir or Madam,
As an individual investor in the stock market, I feel it is of utmost
importance that auditing and consulting services be separated. Not to do so
is akin to leaving the fox to guard the henhouse. I fully support and
applaud all efforts in this direction.
Furthermore I would like to express my appreciation for the recent
disclosures mandate that eliminated the advantage that institutions had over
individual investors in obtaining news pertaining to the financial decisions
and health of the publicly traded companies in which we invest.
Sincerely,
James D. Walterhouse
1101 E. Pecan Blvd. #55
McAllen, TX. 78501
Author: Brian Williams at Internet
Date: 09/09/2000 12:09 PM
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TO: RULE-COMMENTS at 03SEC
Subject: File No. S7-13-00
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My comment on the proposed rule concerning auditor independence:
Though there may not be any cases demonstrating a compromised audit due
to consulting activities for the same client, ordinary human experience
indicates that such relationships are ripe for hidden, maybe
unconscious, abuse.
This is why most professions have rules prohibiting even the appearance
of a conflict of interest. Doesn't the auditing profession have such
rules? Don't they perceive this as the appearance of a conflict? I
certainly do, and I believe most ordinary people would agree.
Pass the rule.
--
Brian Williams
Experience is what you get when you didn't get what you wanted.
Author: Ed and Carole at Internet
Date: 09/09/2000 11:56 AM
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TO: RULE-COMMENTS at 03SEC
Subject: "File No. S7-13-00"
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I strongly support rule making that would require separation of auditing
functions and consulting functions. I don't believe it is possible to
fully trust audit reports prepared by firms with a consulting
relationship to the firm being audited.
Edward D Williamson
Investor
Author: ernie yap at Internet
Date: 09/09/2000 8:00 AM
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TO: RULE-COMMENTS at 03SEC
Subject: keep accounting and consulting services seperate
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I just finished reading the Motley's Fool's article
about keeping accounting and consulting services
seperate. My vote goes to doing just that.
Sincerely,
Ernie Yap
http://www.sec.gov/rules/proposed/s71300/0909b01.htm
