8. on the case, the SEC made no recommendation on this subject. Evaluation: Management, representing companies being audited, are hardly I am writing this to you in your position as a member of the Metcalf Committee to express our position as a major, general management consulting firm. As you know, A.T. Kearney has a long and distinguished heritage. We celebrated our 50th anniversary during 1976. We are Chicago based and for many years have served a majority of Fortune's 500 largest industrial firms, including your former company, Bell and Howell. Currently we employ about 500 persons; over 300 of whom are professional consultants. Our friend, Ted Barry, President of Theodore Barry & Associates, testified before your committee on May 10th and also provided under date of May 10th a letter to the committee in support of that testimony. A copy of that letter is attached. We believe that Ted did a complete and professional job in his effort to "acquaint your committee with our profession in order for you to better understand what has been happening over the past 20 to 30 years" and in his expression of the profession's position relative to the objectives and work of your committee. We essentially concur with many of his comments. In brief summary, our position is as follows: Exclude CPA firms from doing "management consulting" Percy The Honorable Charles H. Percy Page May 27, 1977 They would not be permitted to perform clients. We sincerely appreciate your efforts as not only our senior and favorite Senator from Illinois, but also as a member of the Metcalf Committee. Sincerely, Donald E. Ramlow President der/a CC: Kenneth L. Block, Chairman, A. T. Kearney, Inc. Metcalf Committee: Sen. Lee Metcalf Sen. John C. Danforth Sen. Sam Nunn Sen. Henry M., Jackson Mr. Jack Chesson As you may surmise, I am vitally concerned with the conclusions of Senator Metcalf's Subcommittee on Reports, Accounting and Management, dealing with Accounting Firms' performance and with particular reference to the conflict of interest caused by their involvement in Management Consulting Services. I felt my comments might be helpful because of the progressive interest you took when you had me install the Work-Factor® System at Bell and Howell back about 1951. By the way, that System is still intact, and working well. Bell and Howell was one of the first Companys to install Work-Factor, which is now worldwide. After some nineteen years of experience in four major U.S. Industrial Firms, about equally distributed between Accounting, Industrial Engineering, Manufacturing, and Executive Positions, I've gained quite a bit of insight into the Accounting conflict. My manufacturing experience was followed by ten years of participation in the operation of the Science Management Corporation now a good sized International Consulting Firm. All of my experience has pointed up the fact that it is not to be expected a person, or a Company, can install Systems and then prepare an objective Audit as to how well they are working. It certainly seems too much to expect a Firm which installs a Material Control System to be objective in its reporting, if it finds at year end, the inventories are out of balance because the System didn't do the job it was planned to do. The same principle logically applies to other Control Systems such as It is for these reasons, Chuck, that I urge your consideration and vote which will remove the conflicting Consulting Functions from Accounting Firms, so they can perform pure audits. I've attached our latest annual report for your information. You'll note we went public in 1968. If it will help, I or my people will be more than glad to come to Washington for conversations with anyone you suggest. JHQ: cjr Sincerely, J. H Quick (Enclosure retained in subcommittee files.) |