SEC Adopts Auditor Independence RulesWashington, DC, January 31, 2003 - The SEC has adopted rules intended to strengthen auditor independence requirements, as directed by the Sarbanes-Oxley Act of 2002. The rules, among other things: - expand the types of non-audit services that, if provided to an audit client, impair an accounting firm's independence;
- require that an issuer's audit committee pre-approve all audit and non-audit services provided by the auditor;
- prohibit members of an audit engagement team from accepting certain employment positions with audit clients for a one-year period;
- require the auditor to report certain matters to the issuer's audit committee, including "critical" accounting policies; and
- require disclosure of the types of services provided by, and fees paid to, the independent accountant.
The rules limit the audit committee's pre-approval responsibility to those services provided directly to an investment company and those services provided to an entity in the investment company complex where the nature of the services provided have a direct impact on the operations or financial reporting of the investment company. The rules also require that the accountant disclose to the audit committee on a quarterly basis all services provided to the investment company complex, including the fees associated with those services. The final rules also require funds to disclose several categories of fees paid to an independent accountant-audit fees, audit-related fees, tax fees, and all other fees.
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