Amanda Iacone posted a brief article on some of the guidance in the Securities and Exchange Commission's (SEC's) updated guidance on auditor independence, including gifts and entertainment, nonaudit services and partner rotation. The article, How Many Gifts Can Auditors Buy Clients and Still be Independent?, first discusses the addition of a "frequently-asked-question" (FAQ) on gifts and entertainment, which is not specifically addressed in the SEC's Rule 2-01, but has been the subject of enforcement actions in recent years as breaches of Rule 2-01's "general standard". As I noted in the article, this is a highly subjective area of the rules requiring auditor judgment as to where the line should be drawn.
Other areas Ms. Iacone addressed include clarifications on nonaudit services, such as proposing on nonaudit services while the auditor is completing a final audit and the application of nonaudit services rules on entities in a private equity structure.
Click here to view the SEC's updated guidance.