The Public Company Accounting Oversight Board announced that the Securities and Exchange Commission has approved the board's recommended ethics and independence rules for auditor independence, tax services and contingent fees.
The ethics rule establishes a general obligation for registered public accounting firms and employees to be independent of the firm's audit clients throughout the audit and professional engagement period. The rules also identify circumstances in which the provision of tax services impairs an auditor's independence, including services related to marketing, planning or giving an opinion in favor of certain tax treatments.
The rules also treat registered public accounting firms as not independent of their audit clients if they enter into contingent fee arrangements with those clients or if the firms provide tax services to certain members of management or management's extended family.
Finally, an ethics rule also codifies the principle that individual accountants within a registered public accounting firm can be held responsible when certain of their actions contribute to a firm's violation of relevant laws, rules or professional standards.
The auditor independence rule become effective April 29, with the rest of the provisions kicking in over the course of the summer and fall. Details are available on the PCAOB's Web site, www.pcaobus.org, under "Rules."
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