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ARTICLE · 21 DECEMBER 2004

SEC Updates Frequently Asked Questions Concerning Auditor Independence

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If a principal auditor’s report refers to and relies on the auditor of a subsidiary or equity method investee of the registrant whose audit report is required to be included in a SEC filing, the auditor of the subsidiary or investee must comply with the SEC’s independence rules, including partner rotation requirements, and the principal auditor is primarily responsible for determining and confirming compliance with these rules.

United StatesFinance and Banking
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SEC Updates Frequently Asked Questions Concerning Auditor Independence

The Securities and Exchange Commission has added to its list of frequently asked questions on topics related to auditor independence. The new frequently asked questions document combines these new interpretations with questions and answers issued in 2003 and 2001, including some updated material. The full text of these frequently asked questions can be found at http://www.sec.gov/info/accountants/ocafaqaudind121304.htm. The following are highlights of the new interpretations concerning auditor independence:

  • If an audit partner spends time providing services in a special partner capacity, such as providing tax services or national office/technical services, which continue his or her direct relationship with the issuer, such time would not be considered time off the audit engagement. However, limited discussions solely between the audit engagement team and a partner that has been rotated off the engagement

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