The Public Company Accounting Oversight Board (PCAOB) recently adopted Rule 3526, Communication with Audit Committees Concerning Independence. Rule 3526 will require a registered public accounting firm, before accepting an initial engagement pursuant to the standards of the PCAOB, to describe in writing to the audit committee all relationships between the firm or any of its affiliates and the issuer or persons in a financial reporting oversight role at the issuer that may reasonably be thought to bear on the firm's independence. Registered firms will also be required to discuss with the audit committee the potential effects of any such relationships on the firm’s independence. Further, the Rule will require firms to make a similar communication annually for continuing engagements. If approved by the SEC, Rule 3526 will become effective on the later of September 30, 2008, or 30 days after SEC approval, and will supersede Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and two related interpretations.
The PCAOB also recently adopted an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles. As originally adopted, Rule 3523 provided that a registered public accounting firm is not independent if it or any of its affiliates provides any tax service to a person in a financial reporting oversight role or an immediate family member of such a person during the audit and professional engagement period. The term “audit and professional engagement period” includes both the audit period (the period covered by any financial statements being audited or reviewed) and the engagement period (the period from the time the initial arrangement letter is signed or our procedures begin until the firm resigns or is terminated).
The PCAOB has now determined that providing tax services to such a person during the portion of the audit period preceding the beginning of the professional engagement period does not necessarily impair a firm's independence, and therefore amended the Rule to exclude from its scope tax services provided during the portion of the audit period that precedes the beginning of the professional engagement period. The amendment to Rule 3523 will become effective immediately if approved by the SEC. In the meantime, however, the PCAOB further adjusted the implementation schedule for Rule 3523 as it applies to tax services provided during the audit period to allow the SEC sufficient time to consider whether to approve the amendment to Rule 3523. Therefore, the PCAOB will not apply Rule 3523 to tax services provided on or before December 31, 2008, when those services are provided during the audit period and are completed before the professional engagement period begins.
|
