STRANGE: I was just pointing out my inferiority, actually

STRANGE: I was just pointing out my inferiority, actually

Because you all have made the point strongly that there is no evidence to show that impairment, we would like to see that revenue data to see whether there are instances where we think perhaps there has been some impairment of auditing judgement because of the size of non-audit fees

MR. Where was I? My point is that establishment of state of mind or whether or not someone did something with knowledge I thought was a point of evidence that was used in proceedings.

So I’d say transparency is a friend

And why we would ignore it in this case, where we can’t prove that they behaved in this particular way because of the knowledge of non-audit services, it’s okay to presume that they might have?

Again, there have been studies over the years, a fair amount of research, different commissions that have not been able to come up with an instance, and I’ve been in this business for 32 years.

And I’ve been in and out of a lot of different roles in the firm. I’ve been involved in a lot of difficult situations where maybe I didn’t think we should have donewhat we should have done, but it was never influenced by something outside of the audit process.

There are things that might influence inside the audit process, but never have I encountered that. That’s why I have a great deal of difficulty putting stock in that statement.

COMMISSIONER HUNT: Each of you gentleman I think have made the point that you know of no instances in which the rendition of non-audit services to an audit client has impaired the quality of the audit.

As I think I said this morning, I think I have some cases like that, but I’m not an accountant, thank god, so maybe what I saw was different.

Would each of you be willing to provide the Commission with information on the amount of your firm’srevenues and gross profits from providing your SEC audit clients for non-audit services prohibited by the rule proposal but not currently prohibited?

MR. STRANGE: The question I would ask is would seeing a list of fees by, say, audit tax and consulting for each public company that we audit, how would that imply whether or not there had been an impairment of independence by the presence? I’m not sure.

COMMISSIONER HUNT: I’m not so sure that at the present time — you said there are no instances that you were aware of, but if we had a running count of that kind of stuff on an annual basis and we saw what we thought was an impaired audit, the correlation between the impaired audit and the difference between the auditing fees and consulting fees might appear to be very relevant.

MR. STRANGE: I see. If there’s a problem, and then you look back and you see the presence, then the question could be asked. I see your point.

If you’re asking me if we would be willing to provide such information, I haven’t really given that anythought, and it’s not my ultimate decision.

MR. STRANGE: But I certainly wouldn’t tell you no at this point in time. In fact, I suspect you could certainly get that information, if you wanted.

MR. BERARDINO: I’d just pile on a little bit, and maybe I’ll be a little aggressive. We don’t own our clients. We can’t make them hire us to do things, and audit committees for all our public clients see all that stuff.

There is no coercion going on here. It’s all a matter of the marketplace working, and, frankly, with different people having a different perception on how the marketplace ought to work.