SEC lightens the load on big five

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

SEC lightens the load on big five

The US Securities and Exchange Commission (SEC) is to adopt milder than expected rule amendments regarding auditor independence. The announcement follows months of debate between the organization and the big five accounting firms.

Accounting firms felt threatened by the SEC's summer proposals that regarded any services other than audit services provided to audit clients to breach auditor independence. Many firms had been working on the one-stop-shop principle providing both audit and advisory services to clients. The SEC felt that this could jeopardize the independence of audits and lead to biased investment. PricewaterhouseCoopers has been especially criticized, with around 8000 allegations of rule violations in 2000 alone.

The new guidelines will become effective in February 2001. Although the firms have had insufficient time to study the legislation in detail, on the surface the amendments appear to help them. Ernst & Young, Deloitte & Touche and Arthur Andersen all confirm that they are very pleased with the new ruling.

The amendments reduce the number of audit firm employees whose investments in audit clients are attributed to the auditor, and allow firms to provide certain non-audit services, including IT consultancy, to audit clients. Certain conditions related to quality must be satisfied.

While the firms have expressed their satisfaction with the ruling, there is some risk that the details of the legislation could restrict services. However, Deloitte & Touche, who disagreed strongly with the original ruling states that the rules will have no significant impact on the business, as it can now continue to stay together as a multidisciplinary firm.

more across site & shared bottom lb ros

More from across our site

The tax technology company will be providing a free demonstration of its OTP software and offering best practice advice on whether to ‘buy or build’ on September 8
Johanes Glorinus Saragih of Indonesia’s Directorate General of Taxes outlines the nation’s delicate geopolitical situation, as it sits between a rock and a hard place with the US and pillar two
The law firm’s head of tax, trade and wealth management likens tax legislation to a complex puzzle, recommends a sturdy coffee mug, and explains why acronyms make tax cool
The global tax and accounting firm has appointed two experienced TP advisers from a New Jersey-based boutique
A lack of commitment from major jurisdictions and the associated compliance burden are obstacles facing the OECD initiative
Richard Gregg is no longer fit and proper to be a tax agent, said the TPB; in other news, MHA completed its acquisition of Baker Tilly South-East Europe
Recent Indian case law emphasises the importance of economic substance over mere legal form in evaluating tax implications, say authors from Khaitan & Co
PepsiCo was represented by PwC, while the ATO was advised by MinterEllison, an Australian-headquartered law firm
Three tax experts dissect the impact of a 30% tariff that has shaken up trade relations between South Africa and the US
Awards
ITR is delighted to reveal all the shortlisted nominees for the 2025 Americas Tax Awards
Gift this article