SEC Offering Amnesty for Independence Violations
The SEC has initiated a look-back program in which all participating accounting firms will subject themselves to independent scrutiny of their financial independence with regard to their audit clients. Participating firms as well as their clients will be provided with a safe harbor from enforcement unless certain serious violations occurred.
The look-back program is entirely voluntary, but it is hoped that the amnesty incentive will provide the necessary encouragement for firms to participate. All of the Big 5 accounting firms have agreed to participate in the program.
According to Arthur Levitt, Chairman of the SEC, the result of the program will be to "enhance investor confidence and will lead to improved quality control systems."
The program stipulates that investments of audit partners, non-audit partners, managerial and professional employees, and their spouses and dependents, will be examined for the nine-month period ending 3/31/00. The examination will occur between June 15, 2000 and June 15, 2001, with reports due to the SEC by July 15, 2001.
Prohibited investments include direct investment in securities of an SEC audit client, prohibited loans with an SEC audit client, and certain employee-benefit-plan accounts holding securities of an SEC audit client.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.