The Securities and Exchange Commission is seeking public comment on the Public Company Accounting Oversight Board's proposed ethics and auditor independence rules concerning independence, tax services and contingent fees.
The latest version of the rules incorporates the board's July approval of a measure banning auditors of public companies from providing certain tax services to their audit clients, along with technical changes passed in November to existing ethics guidelines.
The new rules would ban auditors from providing three primary types of tax services to clients, including:
- Tax services involving contingent fee arrangements;
- Tax marketing, planning, or advice in favor of tax treatments that are considered confidential, or that are based on an aggressive interpretation of applicable tax laws and regulations; and,
- Tax services to certain corporate managers who serve in financial reporting oversight roles at an audit client or tax services, or those manager's immediate family members.
Under the PCAOB's original proposal, auditors would have had to provide audit committees with engagement letters for proposed services, which many complained would be too burdensome due to the potential volume of information involved. Now, auditors must provide audit committees with a description of proposed services, rather than the actual engagement letters.The full rule is available in its entirety at www.sec.gov/rules/pcaob/34-53427.pdf.
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