SEC Proposes Updating "Auditor Independence" Framework

The SEC proposed updating its "auditor independence" rules and codifying certain staff consultations.

According to the SEC, the proposed amendments to Rule 2-01 of Regulation S-X would, among other things:

• clarify certain affiliate relationships in common control scenarios;
• lessen the look-back period for domestic first-time filers when assessing compliance with the independence requirements;
• expand the categorical exclusions from independence-impairing lending relationships to include certain student loans and de minimis consumer loans;
• replace the reference to "substantial stockholders" under the "business relationship rule" with a substantial influence analysis; and
• introduce a transition framework that addresses "inadvertent" independence violations that result from corporate events such as mergers and acquisitions.

Comments must be submitted with 60 days of publication in the Federal Register.