SEC Adopts Amendments to Modernize Auditor Independence Rules -
On October 16, the Securities and Exchange Commission adopted amendments (the Amendments) to its long-standing auditor independence rules. The Amendments, which largely mirror the amendments proposed in December 2019, reflect updates based on recurring fact patterns and related SEC staff consultations, respond to recent changes in capital market conditions and modify certain aspects of the auditor independence framework set forth in Rule 2-01 of Regulation S-X (Rule 2-01). Rule 2-01, among other things, requires auditors to be independent of their audit clients “both in fact and in appearance.” As previously described in the January 17, 2020 edition of Corporate & Financial Weekly Digest, Rule 2-01(b) sets forth the general standard for auditor independence, while Rule 2-01(c) provides an illustrative list of relationships and circumstances in which an accountant would not be considered independent, including certain financial, employment, business and other relationships between the auditor and the audit client.
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