Thank you, Mr. Chairman for holding this important and timely hearing on the SEC's auditor independence proposal.
The capital markets of this great country are the most liquid and transparent in the world. This is by no accident. The respected and self-regulated accounting profession has much to do with the fact that financial reporting in America is unrivaled.
While I agree with the goal of the SEC's proposal, I believe it is the wrong approach to the problem. In fact, I haven't even seen evidence of a problem. Empirical evidence of auditor impairment as a result of the non-audit services provided to a client has not been produced. This is particularly troubling, given the profound impact it would have on certain accounting firms, potentially even many small firms.
I also find it disconcerting that a wholly inadequate cost-benefit analysis has been provided. A federal regulation should not exist to merely make us feel good. If the government is to step into the marketplace and regulate, there must be an identifiable and measurable market failure or justification for the government action.
Audits should be reliable and free from actual conflicts of interest. However, the proposal does not adequately address the costs associated with its implementation nor further the goal of protecting the public interest.
I look forward to hearing from each of the witnesses.
Thank you Mr. Chairman.