The Center for Audit Quality and the American Institute of CPAs have jointly issued a new member alert reminding audit firms of the independence rules required by the Securities and Exchange Commission and the Public Company Accounting Oversight Board.
The alert outlines the rules applicable to financial statement audit and attestation engagements undertaken for non-issuers, such as broker-dealers and registered investment advisers, related party custodians, or private funds such as pooled investment vehicles.
The alert addresses topics such as the applicability of SEC and PCAOB independence rules, financial statement preparation, and other engagements subject to SEC or PCAOB independence rules.
“Independence is a cornerstone of audit quality,” said CAQ executive director Cindy Fornelli in a statement. “This alert is an important reminder for firms to review the applicable rules and regulations, and to revisit their organization’s policies on this critical issue, as needed.”
The alert is a follow-up to independence guidance that the CAQ and AICPA issued in a joint alert in May.
“While we often associate the independence rules with the audits of issuers, auditors should be aware of the application of those rules to certain non-issuer audit engagements, such as those of broker-dealers that are registered with the SEC,” said AICPA president and CEO Barry C. Melancon. “This alert is intended to give practitioners an overview of which rules are—and are not —applicable in the course of these engagements."
The CAQ and the AICPA cautioned that while the alerts aim to highlight areas of focus, they should not be relied upon as definitive or all-inclusive and should be read together with the applicable rules, regulatory updates, standards and guidance in their entirety.
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