Not honesty alone, but the punctilio of honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. For the trustees of pension funds to discharge their duties of loyalty and prudence in holding the stock and debt of publicly traded companies, the auditors of those companies are necessarily relied upon to discharge their duties of fidelity and independence to the investing public. We therefore fully concur in the prophylactic rule of strict independence as proposed by the Commission.
Appearance counts a great deal in matters of trust.
Not fidelity alone but also the appearance of independence and loyalty is essential to the fiduciary relationship. The burden of preserving the implicitness of that trust falls wholly on the fiduciary. Likewise, any competing relationship that reasonably casts a shadow over the auditor's independence and felicity to the investing public is per se improper. Stated simply, an auditor, to be truly independent, needs to be a person whose audit engagement constitutes its only connection to the company. Although it should indeed be the duty of the audit committee to protect and enhance the independence of the company auditor, we would add that the audit committee should make specific inquiry confirming the auditor's independence in accordance with the final rules of the Commission.