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Despite decades of scrutiny, auditor independence remains a challenge

Joe Mont | March 19, 2019

Since the Securities and Exchange Commission’s birth in 1934, it has consistently emphasized the need for auditors to remain independent.

Way back then, ensuring auditors are independent of their audit clients was hardly a controversial concept. The modern terrain, however, is a lot muddier. The rise of the market-dominating Big 4 firms have all but rewritten what services a client should expect—if not demand—when engaging an audit partner.

As these, and other firms, seek to maintain their bottom-line growth and retain their client base, they are turning to non-audit compliance, technology, and consulting services to increase their value proposition with the goal of making themselves indispensable partners. The risk is how to balance these offerings without triggering regulatory concerns about their independence.

Over the decades, the SEC has developed and maintained its own rules to ensure that auditors are independent of their audit clients. The Sarbanes-...

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