All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

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 & bottom lb ros

More from across our site

The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
Tax directors tell ITR that the CRA’s clampdown on unpaid taxes on insurance premiums is causing uncertainty for businesses as they try to stay compliant.
HMRC has informed tax directors that it will impose automated assessments on online sellers with inaccurate VAT returns, in a bid to fight fraud.
UK businesses need to reset after the Upper Tribunal ruled against BlackRock over interest deductions it claimed on $4 billion in inter-company loans, say sources.
Hong Kong SAR’s incoming regime for foreign income exemptions could remove it from an EU tax watchlist but hand Singapore top spot in APAC.
Congress passed legislation with $52 billion in tax credits and other incentives on July 28 to boost production at US semiconductor companies.
This week the US Senate reached a historic compromise to secure a corporate minimum tax rate, while the UK is facing tax cuts no matter who succeeds Prime Minister Boris Johnson.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree