Information for Non-Accountants

MEMBERS OF AUDIT COMMITTEES AND OTHER PUBLIC COMPANY BOARDS

The Office of the Chief Accountant of the Securities and Exchange Commission (SEC) has released information on independence for Audit Committees. It is available at www.sec.gov/info/accountants/audit042707.htm.

ARTICLES ON AUDITOR INDEPENDENCE AND OTHER ETHICS REQUIREMENTS

• A Global Standard for Professional Ethics” (Journal of Accountancy, May 2008)
• "Navigating the Crossroads of Control and Independence" (Journal of Accountancy, December 2007)
• "An Update for Audit Committees: New Rules on Auditor Provided Tax Services" (Directors Monthly, May 2007)
• "PCAOB Rules on Independence and Personal Tax Services Current Guidance for Public Company Auditors" (CPA Journal, February 2007)
• "How Audit Committees Can Assess Auditor Independence" (Directors Monthly, December 2006)
• "Ethics Rules Get Tighter" (Journal of Accountancy, December 2006)

OTHER RESOURCES

Center for Audit Quality (CAQ)

The Center for Audit Quality was created to serve investors, public company auditors and the markets. The Center’s mission is to foster confidence in the audit process and to aid investors and the capital markets by advancing constructive suggestions for change rooted in the profession’s core values of integrity, objectivity, honesty and trust.

National Association of Corporate Directors (NACD)

NACD is a national non-profit membership organization dedicated exclusively to serving the corporate governance needs of corporate boards and individual board members of companies ranging from Fortune 100 public companies to small, over-the-counter, closely held, and private firms.

Public Company Accounting Oversight Board (PCAOB)

Section 103 of the Sarbanes-Oxley Act of 2002 directs the PCAOB to establish auditing and related attestation, quality control, ethics, and independence standards and rules to be used by registered public accounting firms in the preparation and issuance of audit reports as required by the Act or the rules of the Securities and Exchange Commission.

SEC reviewing new PCAOB rule on communications with audit committees and revisions to the personal tax services rule. On April 22, 2008, the Board adopted rule 3526, which addresses communications with audit committees and would supersede the Board’s existing interim standard (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees). Compliance with the new rule, which is intended to build upon the interim standard, would be required prior to accepting a new audit engagement (a new requirement) and annually thereafter. It would also require the auditor to describe in writing to the audit committee all relationships between the auditor (and its affiliates) and the client (or potential client) that could reasonably be thought to bear on independence. The auditor would be required to discuss these matters with the audit committee and document the substance of that discussion. If approved by the SEC, the new rule will become effective on the latter of September 30, 2008 or 30 days after SEC approval. The PCAOB also adopted revisions to rule 3523 (Tax Services for Persons in Financial Reporting Oversight Roles). Under the amended rule, an auditor could cease performing tax services for persons associated with a prospective audit client (that would normally be proscribed under rule 3523) prior to the beginning of the professional engagement period and still be considered independent. Certain allowances for tax services provided to persons associated with a company filing an initial public offering would also be provided. The Board also extended the implementation period for this aspect of the rule while the SEC considers whether to approve the amendment. Thus, on or before December 31, 2008, the PCAOB will not apply rule 3523 to tax services provided by an auditor during the audit period if the services are completed before the professional engagement period begins. In July 2008, the SEC posted notice of the new and revised rules, which if approved become effective on the latter of September 30, 2008 or 30 days after SEC approval. The SEC is accepting comments on the rules on or before August 4, 2008.

PCAOB proposes auditing standard. The proposed standard, Engagement Quality Review, would supersede the PCAOB’s interim concurring partner review requirement and apply to all engagements performed in accordance with PCAOB standards. Comments were due May 12, 2008.

See the PCAOB Standards Page for the most recent information.