AUGUST 24, 2017 RECENT DEVELOPMENTS
Among other findings, an EY Center for Board Matters Report, "Audit Committee Report to Shareholders in 2017," showed a sharp rise (from 15% in 2012 to 84% in 2017) in the percentage of audit committees that explicitly state that the committee considers non-audit fees and services when assessing auditor independence.
As we know SOX is 15 years old, and the requirement for audit committees to assess the auditor's independence, including nonaudit services, is not new. So, what's driving the dramatic increase in disclosure? Are audit committees merely stating something they've been doing all along? Is it the constant drumbeat from SEC and PCAOB leadership about nonaudit services' impact on independence and that audit committees should step up, or something else?
And the inclusion of nonaudit fees as an independence consideration (always the elephant in the room, along with audit fees)... no explicit SEC independence rule under SOX outside of proxy disclosures (the closest independence "rule" being a staff position in the Codification of Financial Reporting Policies (i.e. "15%" rule-not very widely known, I suspect). But certainly fees are always talked about and would also need to be considered under the Rule 201-b's "general standard" (under Reg S-X).