On September 9, 2019, Securities and Exchange Commission (SEC) Chief Accountant, Sagar Teotia, addressed the AICPA National Conference on Bank & Savings Institutions. The speech, The Importance of Financial Reporting and Auditing, Domestically and Internationally, touched upon several topics, including:
- standard-setting oversight
- implementation of new accounting and auditing standards
- independence rule-making
- the Monitoring Group
On the subject of independence, Mr. Teotia noted that:
- monitoring independence is essential;
- company management, audit committees and audit firms need to understand independence; and
- management and the audit committee must understand how independence violations may impact their company's SEC filings.
Mr. Teotia mentioned the SEC's revision to the independence requirements this past June, which align the restrictions on an auditor's lending relationships more closely to those that investors would consider important. He also mentioned that the Staff updated its frequently-asked-questions (FAQs) as follows:
- Reorganized the FAQs to align specific topics with the structure of the Independence Rules;
- Removed transition FAQs that were no longer needed; and
- Added ten (10) new FAQs and made substantive changes to certain existing FAQs based on consultation trends since the last update.
More to Come
According to Mr. Teotia, the Staff is actively working on recommendations for additional changes to the independence rules based on feedback the SEC received when proposing changes to the loan provision.