SEC Proposes New Guidelines on Auditors

The Securities and Exchange Commission proposed new guidelines aimed at avoiding conflicts of interest by accounting firms that provide consulting services to companies they audit. While tightening some rules, the commission proposed easing restrictions on many employees of accounting firms and their family members holding investments in audit clients. The proposals seek to address possible conflicts of interest that can arise when accounting firms branch out into consulting services or have other financial ties with audit clients. The proposed rules include a prohibition on accounting firms performing bookkeeping for audit clients and would bar those firms from designing and implementing hardware or software systems that generate essential information for the audit client’s financial statements. The SEC also moved to narrow the circle of people at accounting firms whose investments trigger independence questions. The SEC will allow 75 days for public comment on the proposed rules before any final action is considered.