Identifies services which are inconsistent with independence
On November 21, 2000 the SEC finalized and posted its release adopting rule amendments regarding auditor independence, which the Commissioners voted to adopt on November 15. Revision of the Commission’s Auditor Independence Requirements, Release Nos. 33-7919, 34-43602, 35-27279, IC-24744, IA-1911, FR-56 (Nov. 21, 2000).
The controversial rule amendments provide that the SEC will not recognize an accountant as independent, with respect to an audit client, if the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances would conclude that the accountant is not, capable of exercising objective and impartial judgment on all issues encompassed within the accountant’s engagement.
The rules identify nine specific non-audit services that are deemed inconsistent with the auditor’s independence, some of which were already restricted, and require increased proxy statement disclosure for audit services.
Less controversially, the amendments also significantly reduce the number of audit firm employees and their family members whose investments in, or employment with, audit clients would impair an auditor’s independence.
Copyright 2000, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to firstname.lastname@example.org
Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.
Return to The Securities Law Home Page
- NASAA Objects to Finder Change
- SEC Claims Wells Fargo Executives Misled Investors
- Firm Fined For Lax Text Message Storage
- Whistleblower Award for New Analysis, Not New Information
- SEC Charges Firms in Connection with Sales of Complex Exchange-Traded Products
- Mike Willis Named Associate Director in Division of Economic and Risk Analysis
- SEC Publishes Notice of German Substituted Compliance Application and Proposed Order
- SEC Awards More Than $3.6 Million and $750,000 in Separate Whistleblower Awards
- Small Account Policies Hurt Advisers, Force Transitions
- SEC Issues Warning to Broker-Dealers on Borrowing from Fully Paid Lending Programs
Introductions and Primers
- What is Securities Arbitration?
- Overview of the Securities Arbitration Process
- The Firm’s Lawyer or Your Own Lawyer?
- Finders Explained – Be Careful
- Federal Securities Law, a Securities Lawyer Guide
- Introduction to State Securities (Blue Sky) Laws
- Expungement of Customer Complaints
- Guide to Broker-Dealer Registration