Given their size, these accounting firms cannot avoid either competing with audit clients within the IT space or delivering services designed to facilitate other companies competing with their audit clients. Auditors of companies that operate in the IT arena gain valuable knowledge about their clients as they have unrestricted access to sensitive information such as business plans, detailed business results and pricing models in order to complete their required function. Accordingly, there is substantial risk of transferring intellectual capital from a client to the consulting practice of the accounting firm and others. Any leak of this type of valuable information, or even directional indicators, across the firewalls is harmful to the audit client's interest and the industry as a whole. The attest function is a key element of thriving and efficient capital markets.
Independence is crucial to the integrity of the attest function.
Auditors conducted quality audits long before they ever offered consulting services. In our opinion, no firewall is solid enough to prevent the inherent conflicts between the IT marketplace and the audit function. We strongly urge the SEC to narrow the definition of permitted services provided by public accounting firms in order to maintain auditor independence, in both fact and appearance. Thank you for the opportunity to comment on this issue.