Ethics and Independence
Federal Statutes - Auditor Independence
Statues governing public company auditor independence include:
- Securities Exchange Act of 1934 - Section 10A - Audit Requirements
- Sarbanes Oxley Act of 2002 - Title II - Auditor Independence
Securities and Exchange Commission (SEC)
The SEC adopted and revised Rule 2-01, Qualifications of Accountants (codified within the Code of Federal Regulations (CFR) 17 CFR Part 210 - Regulation S-X) to implement the auditor independence requirements within the statues noted above.
Rule 2-01 was revised in 2000 and again in 2003. The amendments are explained in the respective releases:
- Release No. 33-7919 - Revision of the Commission's Auditor Independence Requirements
- Release No. 33-8183 - Strengthening the Commission's Requirements Regarding Auditor Independence
Additional SEC reference materials related to auditor independence rules include:
- Auditor Independence
- Independence Reference Materials
- Guidance for Consulting with Office of the Chief Accountant (Section - Auditor Independence Matters)
Public Company Accounting Oversight Board (PCAOB)
Firms registered with PCAOB are required to comply with ethics and independence rules that have been approved by the SEC. The PCAOB has also issued staff guidance applicable to certain ethics and independence rules.
Additionally, in April 2003, the PCAOB adopted certain preexisting ethics and independence interim standards.
- Interim Ethics Standards consist of ethics standards described in the AICPA's Code of Professional Conduct Rule 102, and interpretations and rulings thereunder, as in existence on April 16, 2003, to the extent not superseded or amended by the PCAOB.
- Interim Independence Standards consist of independence standards described in the AICPA’s Code of Professional Conduct Rule 101, and interpretations and rulings thereunder, as in existence on April 16, 2003, to the extent not superseded or amended by the Board, and certain standards, and interpretations, of the Independence Standards Board, to the extent not superseded or amended by the Board.
Note: The PCAOB's rules and interim independence standards do not supersede the SEC's auditor independence rules. Therefore, to the extent that a provision of the SEC's rule is more restrictive - or less restrictive - than the PCAOB's interim independence standards, a registered public accounting firm must comply with the more restrictive rule.
