Article by David S. Rosenthal and Martin Nussbaum
Originally published in February 2003
Summary
On January 28, 2003, the Securities and Exchange Commission (the "SEC") published final rules regarding auditor independence and workpapers retention, as directed by Sections 208 and 802, respectively, of the Sarbanes-Oxley Act of 2002 ("SOX").1 The SEC’s new auditor independence rules are intended to strengthen the existing requirements in that area by, among other things: (i) enumerating prohibited non-audit services, (ii) mandating preapproval by the issuer’s audit committee of audit and permissible non-audit services, (iii) prohibiting certain partners on the audit engagement team from providing audit services to the issuer for more than five or seven consecutive years, depending on the partner’s involvement in the audit, (iv) requiring that the auditor of an issuer's financial statements report certain matters to the issuer's audit committee, including "critical" accounting policies
