SEC 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]
The following information was submitted by 194 individuals.
Subject: Auditor Independence
Comments: I want to offer my support for the changes the Commission is proposing for auditor independence. I commend you and your committee for this initiative
aimed at improving and modernizing the public accounting profession.
My years of experience have taught me that two of the most important
qualities in our profession are reliability and integrity. I have also
learned that perception is often times as important as reality. The work
done by public accountants must be both independent and perceived by
investors and others in the public arena as independent. Anything that
compromises that position should not be tolerated as our financial markets,
indeed our entire business community, rely totally on this position to
function.
I reviewed the proposed rule amendments and also the hearing testimony from
the hearing held July 26, 2000. Like many of those providing testimony, I
believe auditor independence will be best achieved by curbing the
proliferation of non-audit services provided by a public accounting firm to
its audit clients. I think an outright ban on these non-audit services is
the only way to guarantee compliance. There are plenty of non-audit clients
that audit firms can pursue to provide their non-audit services.
At a minimum, the proposed proxy disclosure requirements will help the
public understand the relationship an entity has with its public accounting
firm.
There are many non-audit services that could, potentially, impair
independence. Certainly any outsourcing of the internal audit function to
the organization's external auditing firm impairs independence. But we must
also look deeper and review the services that are not so obvious in their
ability to impair independence. Services such as financial information
systems design and implementation, appraisal or valuation services,
actuarial services, human resources and many management functions must also
be reviewed. I have always believed that auditors cannot function as a part
of client management and remain independent. It is human nature, especially
when fees are involved.
Now is the time to strengthen and modernize our profession and the proposed
SEC rule amendments regarding auditor independence do just that. I urge you
to go forward with these needed changes including the relaxing of
restrictions on investment and employment imputed to a public accounting
firm.
Thank you and all the Commissioners, I look forward to working under the
new guidelines.
Sincerely,
http://www.sec.gov/rules/proposed/s71300/s71300b1.htm