Author:  "Molinaro; Mike" 
  Date:    8/10/98        3:24 PM
          
   Subject: File No. S7-16-98
         
   This letter is to alert you to a matter of significance to the accounting
   profession; a proposed amendment by the SEC to Rule 102(e) of its Rules of
   Practice. This rule governs the conduct of accountants and other professionals
   who perform audits for public companies or otherwise practice before the
   Commission. Rule 102(e)(1)(ii) authorizes the Commission to censure, suspend or
   bar from practice before the Commission, a person who engages in "improper
   professional conduct."

   It appears that this proposed rule would reach mere errors in judgement and
   would use this ordinary negligence standard to bar (or otherwise discipline)
   accountants, whether in industry or public practice, from being associated with
   documents filed with the SEC. It is because of the potential impact of this rule
   that I write this letter to you.

   I am firmly committed to protecting the investing public from untrustworthy or
   grossly incompetent practitioners. That important objective can and should be
   accomplished without sanctioning accountants for good faith differences of
   opinion about what professional standards require or for isolated negligent
   errors in the application of professional standards. While the investing public
   has an obvious interest in the integrity of the Commission's processes, it also
   benefits from an environment in which accountants are free to exercise their
   best independent judgement without fear that a particular judgement might be
   viewed, in hindsight, as subject to sanction by the SEC.

   For these reasons, the I believe that a Rule 102(e) negligence standard with
   respect to accountants contravenes public policy, treats accountants in a
   discriminatory manner, and would actually diminish the vital role of accountants
   as guardians of the financial reporting system.

   It would be far better, for investors and accountants alike, if the Commission
   instead were to adopt an approach which sanctions accountants only in the event
   of a knowing or conscious and deliberate violation of applicable professional
   standards or when a pattern of misconduct that can be shown to create the
          required risk to the Commission's processes or the financial reporting system.