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June 19, 2019

SEC adopts amendments to auditor independence rules

The US Securities and Exchange Commission (SEC) has adopted amendments to its auditor independence rules relating to the analysis that must be conducted to determine whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client. 

The SEC said it had become aware of circumstances where the existing rules capture relationships that otherwise do not bear on the impartiality or objectivity of the auditor.  The amendments are intended to focus the rules on those lending relationships that may bear on external auditors’ impartiality or objectivity while reducing compliance burdens. 

“This rulemaking reflects the staff’s extensive experience and judgment, and I thank them for their continued commitment to retrospective review,” said SEC Chairman Jay Clayton.  “The amendments we are adopting today will more effectively identify debtor-creditor relationships that could impair an auditor’s objectivity and impartiality, as opposed to certain more attenuated relationships that are unlikely to pose such threats.”

The amendments will become effective 90 days after they are published in the Federal Register.

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