Academic journal article Journal of Accountancy

AICPA Raises Bar on Auditor Independence

Academic journal article Journal of Accountancy

AICPA Raises Bar on Auditor Independence

Article excerpt

The AICPA strengthened its independence requirements for auditors of public companies. New rules, which the executive committee of the SEC practice section of the AICPA division for firms (SECPS) approved and which are intended to bolster investor confidence in financial reporting, took effect January 1, 2000.

The rules address business and financial relationships that could create a conflict of interest and undermine auditor independence if entered into by an auditor, his or her spouse or a dependent. Each of the SECPS's 1,300 member firms is required to establish a policy prohibiting auditors from engaging in such relationships.

Each firm also must designate as its "independence champion" a partner who will see that the professional audit staff has all the information needed to comply with the new rules. In addition, all audit professionals must, when they are hired and afterward, undergo training in the new requirements, attend periodic refresher courses and certify that they have read, understood and complied with the firm's independence policy.

Susan Coffey, AICPA vice president of self-regulation and the SECPS, said, "Independence and related quality controls are `top of mind' for the profession. …

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