As such, my comments relate to the impact of your independence proposals on the business rather than the practice of accounting. The rules as proposed will shatter the economic viability of the business of accounting. Most accounting firms have remained viable only because they have developed tangential services and niches to subsidize the marginal profitability of the accounting practice. Virtually all the mid tier firms, if forced to choose today between attestation and tangential services would have no choice but to abandon audit and reviews. Because the independence standards for non-public companies mirror the standards for public companies, the proposal has the potential of disenfranchising most of the practicing accountants who serve the hundreds of thousands of small businesses in the country.
Accountants are the referees of business.
We already are seeing a mass exodus in favor of more lucrative employment. We are seeing a sharp reduction in the number of bright students prepared to make a career of accounting. Right now, the profession is struggling to address these trends. If the proposal accelerates the losses, there will be chaos in the economy from top to bottom. Misallocation of funds, errors on tax returns, fraud and deceptive financial statements in the non-public sector are likely to dramatically increase in the absence of experienced referees.