In a letter sent out late last week, Levitt reminded audit committee chairmen that, under rules adopted by the SEC a year ago, audit committees possess "the tools and the wherewithal to fulfill their duty to the investing public."

"More specifically, the Commission's rules require companies to state in their proxy statement whether the audit committee has considered whether the provision of the non-audit services is compatible with maintaining the auditor's independence," said Levitt, who recently announced that he would be stepping down by mid-February.

And in August, the Panel on Audit Effectiveness issued its final report and provided guidance an audit committee can use to determine the appropriateness of a service. For example, is the service being performed principally for the audit committee? And is the audit firm personnel assuming a management role or creating a mutual or conflicting interest with management?

"I encourage your committee to take every step possible to ensure that the integrity of the financial statements, and by extension, the interest of shareholders, remains second to none," Levitt wrote.

-- SmartPros News Staff

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