The SEC adopted a final rule that updates its "auditor independence" rules and codifies certain staff consultations.

As previously covered, the amendments to Rule 2-01 of Regulation S-X ("Qualifications of accountants") would, among other things:

  • clarify certain affiliate relationships in common control scenarios;
  • shorten the look-back period for domestic first-time filers when assessing compliance with the independence requirements;
  • expand the categorical exclusions from independence-impairing lending relationships to include certain student loans and de minimis consumer loans;
  • replace the reference to "substantial stockholders" under the "business relationship rule" with a substantial influence analysis; and
  • introduce a transition framework that addresses "inadvertent" independence violations that result from corporate events such as mergers and acquisitions.

The final rule goes into effect 180 days after its publication in the Federal Register.

Primary Sources

  1. SEC Press Release: SEC Updates Auditor Independence Rules
  2. SEC Final Rule: Qualifications of Accountants
  3. SEC Joint Statement, Allison Herren Lee, Caroline A. Crenshaw: Who Watches the Watchers?
  4. SEC Statement, Jay Clayton: Promoting an Effective Auditor Independence Framework

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