{"id":2192,"date":"2022-06-13T15:25:10","date_gmt":"2022-06-13T19:25:10","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2192"},"modified":"2022-06-13T15:25:10","modified_gmt":"2022-06-13T19:25:10","slug":"acting-chief-accountant-addresses-auditor-independence-and-ethical-cultures-in-audit-firms","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/acting-chief-accountant-addresses-auditor-independence-and-ethical-cultures-in-audit-firms\/","title":{"rendered":"Acting Chief Accountant Addresses Auditor Independence and Ethical Cultures in Audit Firms"},"content":{"rendered":"<p>On June 8, 2022, Acting Chief Accountant Paul Munter issued a <a href=\"https:\/\/www.sec.gov\/news\/statement\/munter-20220608?utm_medium=email&amp;utm_source=govdelivery\">Statement<\/a> titled \u201cThe Critical Importance of the General Standard of Auditor Independence and an Ethical Culture for the Accounting Profession.\u201d<\/p>\n<p>The <a href=\"https:\/\/www.sec.gov\/news\/statement\/munter-20220608?utm_medium=email&amp;utm_source=govdelivery\">Statement<\/a>:<\/p>\n<ul>\n<li>Reviews the principles in the SEC\u2019s auditor independence framework,<\/li>\n<li>Summarizes OCA\u2019s approach to independence questions,<\/li>\n<li>Lists recurring issues in independence consultations, and<\/li>\n<li>Discusses the importance of an ethical culture to accounting firms.<\/li>\n<\/ul>\n<p>The <strong>auditor independence framework<\/strong> section begins with a review of the foundational principles in S-X Rule 2.01:<\/p>\n<p style=\"padding-left: 30px;\">The Commission will not recognize an accountant as independent, with respect to an audit client, if the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances would conclude that the accountant is not, capable of exercising objective and impartial judgment on all issues encompassed within the accountant&#8217;s engagement. In determining whether an accountant is independent, the Commission will consider all relevant circumstances, including all relationships between the accountant and the audit client, and not just those relating to reports filed with the Commission.<\/p>\n<p>The discussion emphasizes that a simple \u201cchecklist compliance exercise\u201d with the detailed requirements in Regulation S-X will not assure that an auditor is independent.\u00a0 All \u201crelevant circumstances\u201d must be considered when assessing independence.<\/p>\n<p>The discussion of <strong>OCA\u2019s approach to independence questions<\/strong> briefly reviews the staff\u2019s process and emphasizes several considerations, including:<\/p>\n<ul>\n<li>Consultations should include all information relevant to an independence determination, and<\/li>\n<li>Companies and their auditors should not place undue reliance on previous independence consultations as circumstances, legal or regulatory requirements may be different.<\/li>\n<\/ul>\n<p>The discussion of<strong> recurring issues in independence consultations <\/strong>begins with a discussion of concerns by the OCA staff that they are observing \u201cloosening attitudes\u201d about the general independence standards.\u00a0 It also focuses on the \u201cchecklist mentality,\u201d non-audit services, including providing non-audit services to affiliates, and risks in alternative practice structures.<\/p>\n<p>The concluding section about <strong>ethical culture issues<\/strong> begins with this statement:<\/p>\n<p style=\"padding-left: 30px;\">\u201cIt is of paramount importance that public accounting firms foster a culture of ethical behavior with respect to all aspects of their professional responsibilities, including auditor independence.\u201d<\/p>\n<p>Included are discussions of how firms should be willing to forgo engagements that are \u201cclose-to-the-line\u201d for independence and the importance of quality control systems.<\/p>\n<p>As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On June 8, 2022, Acting Chief Accountant Paul Munter issued a Statement titled \u201cThe Critical Importance of the General Standard of Auditor Independence and an Ethical Culture for the Accounting Profession.\u201d The Statement: Reviews the principles in the SEC\u2019s auditor independence framework, Summarizes OCA\u2019s approach to independence questions, Lists recurring issues in independence consultations, and &hellip; <a href=\"https:\/\/seciblog.pli.edu\/index.php\/acting-chief-accountant-addresses-auditor-independence-and-ethical-cultures-in-audit-firms\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">Acting Chief Accountant Addresses Auditor Independence and Ethical Cultures in Audit Firms<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[242,110,96],"tags":[],"coauthors":[154],"class_list":["post-2192","post","type-post","status-publish","format-standard","hentry","category-reporting","category-role-of-the-audit-committee","category-sec-hot-topic"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2192"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2192\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2192"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}