Date:    08/14/2000  12:48 AM
Subject: Reference file #S7-13-00

The proposed rule changes, regarding non-audit services provided by CPA firms to
their audit clients, may seem at first to be a bit like Chicken Little reacting 
to raindrops.  However, the rule changes may be good for the profession of 
public accounting, in spite of the vocal opposition being expressed.  
     
The profession has already begun to recognize the importance of specialization: 
witness the AICPAs' accreditation programs for personal financial planning and 
business valuation, to name two examples.  The public has long been curious - 
perhaps, confused - by the CPA designation's requirements versus meaning in 
daily practice.  The profession's move toward specialization helps address that 
issue, and we should encourage any reasonable regulatory actions which are 
consistent with that effort. 
     
The proposed SEC rule changes may cost audit firms some revenue.  However, it 
should encourage those firms to specialize as auditors, enhancing both the fact 
and the appearance of their independence from audit clients.  After all, how 
independent is the firm from its client, if it provides compensation consulting 
to the Board of Directors, while it offers tax advice and planning services to 
the company's executives?  The audit partner, tax partner, and consulting 
partner share a keen interest in the company's continued fee payments to their 
firm; the veil of independence is, therefore, thin and frail.
     
So, let the SEC do its best to protect the investing public from cozy 
relationships between auditors and their clients.  A likely offshoot of this is 
increased competition for non-audit services, as audit firms lose their 
engagements in those areas.  Then, we'll have the audit firm providing 
independent evaluation of a publicly traded company's financial statements, 
while the tax firm provides tax services to the company's employees, absent any 
motives related to the company's financial statements.  Further, corporate audit
committees can evaluate competitive audit bids based solely upon the auditors' 
fee for service proposals, absent any influence from non-audit services 
"sweeteners".
     
John Mitchell, CPA
Sparks, Nevada