According to a recent article in the independent newsletter, the impact of the SEC's auditor independence rules, which are up for vote on Nov. 15, will not be as great as many in the profession feared.

Apparently, the SEC has placed only two consulting services in the line of fire: information technology systems and internal audit outsourcing. The SEC will not prohibit auditors from offering consulting services to publicly traded clients, PAR stated.

"It is definitely a victory for small firms if the rules are approved by the Commission," said Jess Sheer, PAR's managing editor. "Small firms aren't going to be affected and that was a huge worry."

PAR stated that the "Commission would limit restrictions on internal audit outsourcing by keeping the rule from applying to clients whose revenue exceeds a cap, or allowing firms to undertake outsourcing work equal to 40 percent of hours spent on the public audit."

In addition, there would be no absolute prohibitions and audit clients would have to publicly discuss the non-audit services they purchase from their auditors.

The rules, if approved, would most likely be phased in over the next two years, said PAR.

The only Big Five firms that would really feel the pinch from the final rules are Arthur Andersen and Deloitte & Touche, which have no plans to spin off their consulting businesses, said PAR.

In a move to spin off its consulting arm, KPMG has filed with the SEC for an initial public offering of its common stock. Ernst & Young sold its consulting business to professional services firm Cap Gemini and Hewlett-Packard is in discussions with PricewaterhouseCoopers to acquire its consulting unit.

-- SmartPros News Staff

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