SEC Proposes Amendments to Auditor Independence Loan Rule

May 11, 2018

On May 2, 2018, the SEC proposed amendments to its rule regarding the analysis of auditor independence with respect to lending relationships between the auditor and certain shareholders of an audit client. The proposed amendments would (1) focus the analysis regarding auditor independence solely on beneficial ownership rather than on both record and beneficial ownership; (2) replace the current 10 percent bright-line shareholder ownership test with a “significant influence” test; (3) add a “known through reasonable inquiry” standard when identifying beneficial owners of the audit client’s equity securities; and (4) change the definition of “audit client” for a fund to exclude funds that otherwise would be considered affiliates of the audit client.

 


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Compliance, Investment Advisers, Investment Companies, Mutual Funds, Regulatory