Excerpted from The Wall Street Journal article, “SEC Planning More Changes to Auditor-Independence Rules”
U.S. Securities and Exchange Commission Chairman Jay Clayton said Monday that he expects to further change rules governing auditor independence in the next year, the latest move to re-evaluate the close relationship between companies and external auditors.
The office of the regulator’s chief accountant is weighing whether to propose rule changes in an effort to make companies’ capital accumulation easier and to protect investors, the SEC has said. The agency included a proposal to amend certain provisions of the auditor independence rules as part of a biannual short-term agenda of planned rule making by federal agencies published in November.
Independence should be at the front of audit committee members’ minds, Mr. Clayton said at a conference hosted by the American Institute of Certified Public Accountants. “I think that’s just a question that the audit committee should be asking themselves on a fairly regular basis,” he said.
Lynn Turner, senior adviser at financial consulting firm Hemming Morse LLP and a former chief accountant of the SEC, worried that looser rules governing auditors could hurt investors. “When you have a relationship between the auditor and the management that pays them,” Mr. Turner said, “the auditor will likely favor management over investors.”
Read the full article here: https://www.wsj.com/articles/sec-planning-more-changes-to-auditor-independence-rules-11575936747