Proposed Rule : Strengthening The Commission's Requirements Regarding Auditor Independence

Overview: Article gives an insight look to the Securities and Exchange Commission’s proposed rules concerning "Strengthening the Commission's Requirements Regarding Auditor Independence. The Commission proposed rules defining an accountant as not being independent from an audit client if any partner, principal or shareholder of the accounting firm who is a member of the engagement team received compensation based on any service provided or sold to that client other than audit, review and attest services. Further, the Commission proposed to amend and require additional disclosures to investors of information related to the audit and non-audit services provided by, and fees paid by the company to, the auditor of the company's financial statements. It talks about the Title II, “ Auditor Independence,” requires the commission to adopt final rules prohibiting certain non-audit services, establishing standards for evaluation of conflicts of interest, requiring auditor partner rotation and second partner review, and defining the relationship between the independent auditor and the audit committee. The proposed rules implementing Title II of Sarbanes-Oxley not only define conduct that impairs independence but also constitute separate violations under the Exchange Act. The Commission drafted the proposed rules as part of Regulation S-X, to be placed among the current auditor independence provisions. The provisions are based on whether an accountant is "independent" in the conduct of the audit and the rules as proposed are structured as rules defining actions that impair an auditor's independence. Violations of the provisions could result in professional discipline in the event of a violation and cause the company's financial statements to fail to conform to Regulation S-X.

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Format: HTML | Date: Dec 2002 | Pages: 1