{"id":2100,"date":"2021-12-07T15:03:41","date_gmt":"2021-12-07T20:03:41","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2100"},"modified":"2021-12-07T15:03:41","modified_gmt":"2021-12-07T20:03:41","slug":"a-message-from-the-chief-accountant-auditor-independence","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/a-message-from-the-chief-accountant-auditor-independence\/","title":{"rendered":"A Message From the Chief Accountant \u2013 Auditor Independence"},"content":{"rendered":"

On October 26, 2021, SEC Acting Chief Accountant Paul Munter released a Statement titled \u201cThe Importance of High Quality Independent Audits and Effective Audit Committee Oversight to High Quality Financial Reporting to Investors<\/a>.\u201d\u00a0 In the Statement, Mr. Munter focuses on the responsibilities of audit committees, management, and of course auditors, in assuring auditors are independent of clients.<\/p>\n

He discusses the importance of auditor independence to our capital markets, the shared responsibility for auditor independence, and the importance of gatekeepers in this process, saying:<\/p>\n

\u201cThe independence of the auditor, in both fact and appearance, is foundational to the credibility of the financial statements.\u00a0 \u00a0While sourcing a high quality independent auditor is a key responsibility of the audit committee, \u00a0compliance with auditor independence rules is a shared responsibility of the issuer, its audit committee, and the auditor<\/strong>.<\/p>\n

As we near the twentieth anniversary of SOX, it is critical for all gatekeepers<\/strong> to continue to vigilantly maintain the independence of auditors, in both fact and appearance. In this regard, auditors and audit clients must carefully consider the scope of their audit and any permissible non-audit engagements that have been pre-approved by the audit committee to guard against impairments of independence. As part of this responsibility, all gatekeepers<\/strong> in the financial reporting ecosystem should be especially mindful of the nature and the scope of any other services provided by the independent auditor.\u201d<\/p>\n

The Statemen<\/a>t highlights the four guiding principles in Regulation S-X behind the SEC\u2019s auditor independence rules.\u00a0 Regulation S-X Article 2.01 states<\/a>:<\/p>\n

\u201cIn considering this standard, the Commission looks in the first instance to whether a relationship or the provision of a service:<\/p>\n