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SEC Changes Some Auditor Independence Rules

By Stephen Barlas
September 1, 2019
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The U.S. Securities & Exchange Commission (SEC) has changed some auditor independence rules—which are administered by the Public Company Accounting Oversight Board (PCAOB)—related to whether an auditor has a lending relationship with certain shareholders of an audit client.

 

The amendments, announced on June 18, 2019, focus the analysis regarding independence on beneficial ownership and replace the existing 10% bright-line shareholder ownership test with a “significant influence” test, among other changes. The final rule closely follows the changes sought in a proposed rule in May 2018. Those changes were applauded by the Big 4 accounting firms and groups such as Financial Executives International.

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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