I am the chief financial officer of Universal Corporation. I would like to comment on the SEC's proposed rule governing auditor independence. These comments are my own and may not necessarily be the same as Universal Corporation's. The proposed rule would render any accountant as lacking independence if that accountant or the accountant's firm performs internal audit services for the audit client or an affiliate of the audit client other than a nonrecurring evaluation of discrete items or programs and operational internal audits unrelated to the internal accounting controls, financial systems, or financial statements. Completion of a successful audit of a large multinational company such as ours at a reasonable cost requires that internal auditors and external auditors coordinate their work.
Internal auditors assist the external auditors with portions of their work and vise versa.
Internal auditors review external auditors' workpapers of foreign subsidiary audits in planning their work. External auditors are routinely hired to assist in translating documents prepared in other than English and assist in communication with company personnel. To avoid having the expensive technical expertise in house, internal audit uses external audit to audit our information systems group. I believe it is efficient to use our external auditors for these services because they already know key personnel, the company's culture and its business. I do not believe it affects their independence in any way.