US

United States Securities and Exchange Commission overhauls auditor independence rules

Douglas P. Faucette, Muldoon Murphy & Faucette LLP. dfaucette@mmf-law.com. (assisted by Rory A. Goode)

Introduction

The United States Securities and Exchange Commission (“SEC”) adopted recently sweeping amendments to the rules regarding the independence of a public company’s auditors under the Securities Exchange Act of 1934 (the “Exchange Act”). Noting that the accounting profession is in the midst of a “dramatic transformation,” the SEC stated in its adopting release that recent changes in the accounting industry, such as the creation of large, multi-national accounting firms through merger and expansion, prompted the SEC to amend its auditor independence rules. The SEC also wanted to address the growing trend in the accounting industry of accounting firms providing consulting and other non-audit services to their audit clients.