Excerpt: ".. Securities and Exchange Commission Chairman Arthur Levitt July 26 defended his agency's
proposal to update auditor independence rules, urging that the perception that auditors' independence is
impaired by conflicts of interest justifies new rules.
The SEC's controversial proposal to revamp its auditor independence rules aims to prevent conflicts
of interest on the part of independent auditors by barring accounting firms from performing an array of
consulting services for the clients they audit.
Of the types of consulting that would be off limits under the SEC rule, all but two - financial
information systems design and implementation, and internal audit outsourcing - already are banned under
the rules of the profession…
Joseph M. Bernardino, managing partner for assurance and business advisory services for Arthur
Andersen's North American operations, stated that his firm supports modernizing the financial interest
and family relationship rules. "We have not had time to study the details, but it is clear that this
modernization is long overdue, and we hope the commission will reconsider its approach of combining
consideration of these rules, around which there is wide consensus..."
