(AICPA, PCAOB Standards and Related Rules, Select Rules of the Board), superseded the PCAOB’s interim standard Independence Standards Board Independence Standard No. The Financial Reporting … These rules are a result of the Sarbanes-Oxley Act of 2002 (the “Act”) and were adopted by the SEC in accordance with Section 208(a) of the Act, although certain aspects of the rules expand upon the auditor independence provisions of the Act. 5 Flickr 6LinkedIn 7 Pinterest 8 Email Updates. These relationships either triggered non-substantive rule breaches or required potentially time-consuming audit committee review of non-substantive matters, thereby diverting time, attention, and other resources of audit clients, auditors, and audit committees from other investor protection efforts. They keep companies honest, and even when intentional fraud isn’t being committed, they can discover errors and other problems that could eventually get the company into trouble and even destabilize the markets. Assume Company X is a U.S.-based portfolio company of Fund F. Fund F invests in various companies around the globe, perhaps dozens or even hundreds, including Company X. CPA professional conduct: Auditor independence — Harmonized Rule of Professional Conduct (Rule 204) Rule 204 sets out the profession’s standards, ensuring Chartered Professional … The Securities and Exchange Commission today announced that it adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X… Third, members of such audit committee shall meet the criteria for independence referenced in Rule 5605(c)(2)(A)(ii) (the criteria set forth in Rule 10A-3(b)(1) under the Act, subject to the exemptions provided in Rule … The following are the five things that can potentially compromise the independence of auditors: 1. “Today’s amendments reflect the Commission’s long-recognized view that an audit by an objective, impartial, and skilled professional contributes to both investor protection and investor confidence,” said Chairman Jay Clayton. STAY CONNECTED SEC Auditor Independence Rules. Recent changes to audit independence rules will impact businesses of all sizes, as the FRC increases the separation of audit and non-audit services and introduces further restrictions. 1 Twitter 2 Facebook 3RSS 4YouTube In addition, until now, the auditor of a company in an IPO had to be independent for the period co-extensive with the financial statements included in the registration statement. SEC staff has provided similar feedback in these types of scenarios over the past decade. Auditor independence refers to the independence of the external auditor. In June 2019 the Securities and Exchange Commission (“the Commission” or “SEC”) adopted amendments to its auditor independence requirements in Rule 2-01 of Regulation S-X, Qualifications of Accountants, regarding the analysis that must be conducted to determine whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client. The board said it was adopting changes to its auditor independence rules so they better align with the SEC’s recent revisions to Rule 2-01, Qualifications of Accountants, in Regulation S-X. Earlier this month, the Securities and Exchange Commission (SEC) continued its modernization plan and updated rules related to auditor independence requirements. “These modernized auditor independence requirements will increase investor protection by focusing audit clients, audit committees, and auditors on areas that may threaten an auditor’s objectivity and impartiality. These final rules also change the auditor independence requirements related to initial public offerings (IPOs), M&A activity and similar corporate events, and certain requirements around ordinary course debtor-creditor relationships. 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