X

SEC Acting Chief Accountant Highlights Importance of Auditor Independence Rules

"To preserve the critical role that accountants play in serving the public interest and fulfilling an investor protection mandate, audit firms should lead by example. They should. . . prioritize auditor independence and a culture of ethical behavior in all professional activities, and where independence on an audit engagement is a close-to-the-line call, the firms must be willing to forego audit and review fees or potentially lucrative restructuring proposals to comply with their independence responsibilities."
Paul Munter, SEC Acting Chief Accountant
"To preserve the critical role that accountants play in serving the public interest and fulfilling an investor protection mandate, audit firms should lead by example. They should. . . prioritize auditor independence and a culture of ethical behavior in all professional activities, and where independence on an audit engagement is a close-to-the-line call, the firms must be willing to forego audit and review fees or potentially lucrative restructuring proposals to comply with their independence responsibilities."
Paul Munter, SEC Acting Chief Accountant

SEC Acting Chief Accountant Paul Munter highlighted the importance of the auditor independence framework and of fostering an ethical culture to ensure investor protection and confidence.

In a published statement, Mr. Munter reviewed (i) the auditor independence framework under Rule 2-01(b) of Regulation S-X ("Qualifications of accountants"); (ii) the Office of the Chief Accountant's approach and issues concerning auditor independence consultations; and (iii) the "paramount importance that accounting firms foster an ethical culture with respect to auditor independence and fulfil their professional responsibilities."

Mr. Munter outlined principles to help define the auditor independence standard. He encouraged accountants, registrants and audit committees to discuss with the SEC Office of the Chief Accountant possible circumstances that may lead to auditor independence issues. Mr. Munter also noted instances where auditor independence issues are likely to arise: (i) treating Rule 2-01(c) of Regulation S-X as a checklist and ignoring the general standard, (ii) providing non-audit services and (iii) using alternative practice structures.

Primary Sources

  1. SEC Acting Chief Accountant Paul Munter Statement: The Critical Importance of the General Standard of Auditor Independence and an Ethical Culture for the Accounting Profession

Premium Content

Available only to Premium subscribers.

 

Join Premium

US Regulatory Intelligence combines regulatory and enforcement news, analysis, and practical work tools on an easy-to-use digital platform.

Request a Free Trial

Tags

Regulated Activities
Accounting and Audit
Sub-Activity
Auditor Independence
Regulated Entities
Accountants / Attorneys Issuers of Securities
Sub-Entity
SEC-Registered Issuers
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
SEC
Sub-Author
SEC Chief Accountant