SEC Changes Some Auditor Independence RulesBy
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.