Cook, I just had two areas I wanted to follow-up on

MR. COOK: I guess, if you start with a natural aversion to rules and rule-making, you probably can see downsides in codifications and other things, but I don’t have any particular concerns about the principles that are set forth with the exception of I do think the interpretation of the definition of “advocacy” can be taken too broadly and could shut down some communications and activities that are very natural and customary in business relationships that nobody would think of threatening independence. I’m not particularly concerned about that.

COMMISSIONER UNGER: Mr. In your discussion, in response toa question of the Chairman’s about one of the factors that has changed the dynamics of this discussion, you said there was an increase in the magnitude of the consulting business of most of the accounting firms.

MR. But it’s my understanding that the audit services today are in the 30 percent range for the largest firms and that consulting would be half or more of total revenues for those same firms.

COMMISSIONER UNGER: And I think you were saying that the consulting revenues were more substantial, and I guess you’re saying that now, than the auditing revenues.

COMMISSIONER UNGER: Are you concerned or should we be concerned that if we go too far in a particular rule-making that, in fact, will drive the auditing function to be, I guess — what’s the word I’m looking for –disenfranchised, marginalized or to become less of the focus of the firm and that, in fact, the firms will then turn to the more profitable side of the business, the consulting, and we will then truly affect the integrity of the audits because there won’t be any of the Big 5 firms engaged in performing these audits?

I think the growth in consulting has taken place in response to market factors and that auditing has become less dominant, perhaps, or less significant in the overall revenue of these firms just because of those market factors

I think those audit practices within those firms are still very important. The quality of those practices is a matter of significant concern to the leadership of those firms. I do not believe, for one, that auditing has been in any way marginalized or diminished because of the change in the makeup of those revenues.

But that is a consequence of the markets. I would guess the more likely outcome without taking sides on whether the firm should or should not restructure is these restructurings seem to lead to a more prominent role, at least from a revenue standpoint, for the audit function in these revised firms. And to the extent that that is an issue, it would move it in that direction.

COMMISSIONER UNGER: So you couldn’t really have one without the other? In other words, the firms wouldn’t –you don’t think the firms would eliminate the audit function in favor of the consulting function if it wasn’t viable to do both together?

COMMISSIONER UNGER: The other question I had waswhat you were saying about the appearance issue, which I agree with, because I was sitting here thinking, no, we haven’t found any smoking guns, and I think Comptroller Hawke said the same thing, yet there is that appearance issue, which lawyers are held to that standard.

COOK: My current information is based on what I read, not based on anything I know directly

COMMISSIONER UNGER: But as far as the actual synergies that are accomplished through the consulting plus auditing that I think you said does exist, then how do you perform both without having that appearance problem? Is it possible to do that?