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GAO-01-235R 1 (2000-12-18)

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       Accountability * Integrity * Reliability
United States General Accounting Office
Washington, DC 20548

          B-286930



          December 18, 2000

          The Honorable Phil Gramm
          Chairman
          The Honorable Paul S. Sarbanes
          Ranking Minority Member
          Committee on Banking, Housing, and Urban Affairs
          United States Senate

          The Honorable Thomas J. Bliley, Jr.
          Chairman
          The Honorable John D. Dingell
          Ranking Minority Member
          Committee on Commerce
          House of Representatives

          Subject: Securities and Exchange Commission: Revision of the Commission's
                  Auditor Independence Requirements

          Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
          major rule promulgated by the Securities and Exchange Commission (SEC), entitled
          Revision of the Commission's Auditor Independence Requirements (RIN: 3235-
          AH91). We received the rule on November 21, 2000. It was published in the Federal
          Register as a final rule on December 5, 2000. 65 Fed. Reg. 76008.

          The SEC is adopting rule amendments regarding auditor independence in this final
          rule. The amendments modernize the SEC's rules for determining whether an
          auditor is independent in light of investments by auditors or their family members in
          audit clients, employment relationships between auditors or their family members
          and audit clients, and the scope of services provided by audit firms to their audit
          clients.

          Enclosed is our assessment of the SEC's compliance with the procedural steps
          required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.
          Our review indicates that the SEC complied with the applicable requirements.

          If you have any questions about this report, please contact James W. Vickers,
          Assistant General Counsel, at (202) 512-8210. The official responsible for GAO
          evaluation work relating to the subject matter of the rule is Tom McCool, Managing


GAO-01-235R

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