SEC proposes updating auditor independence rules

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SEC proposes updating auditor independence rules

Auditor independence rules would change under a new SEC proposal designed to permit relationships in situations when independence is not substantially threatened.

If adopted, the proposed amendments to the independence rule (Rule 2-01) would:

The proposal is designed to permit relationships and services that trigger breaches of the current rules even though they do not pose threats to an auditor’s objectivity and impartiality, according to an SEC news release. The proposal also intends to prevent potentially time-consuming audit committee reviews of auditor independence issues that are nonsubstantive.

“In practice, the proposed amendments also would increase the number of qualified audit firms an issuer could choose from and permit audit committees and [SEC] staff to better focus on relationships that could impair an auditor’s objectivity and impartiality,” SEC Chairman Jay Clayton said in a news release.

The proposal is based on fact patterns in which the SEC staff regularly observes that the audit firm is objective and impartial and therefore does not object to the continuation of the firm’s relationship with the audit client.

Comments are due 60 days after the proposal is published in the Federal Register.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

Research & References of SEC proposes updating auditor independence rules|A&C Accounting And Tax Services
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SEC proposes updating auditor independence rules

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