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Strengthening Requirements Regarding Auditor Independence

SEC | January 28, 2003

The Securities and Exchange Commission voted to adopt rules to fulfill the mandate of Title II of the Sarbanes-Oxley Act of 2002, strengthen auditor independence and require additional disclosures to investors about the services provided to issuers by the independent accountant.

The measures:

  • revise the rules related to the non-audit services that, if provided to an audit client, would impair an accounting firm's independence;
  • require that certain partners on the audit engagement team rotate after no more than five or seven consecutive years, depending on the partner's involvement in the audit, except that certain small accounting firms may be exempt from this requirement;
  • establish rules that an accounting firm would not be independent if certain members of management of that issuer had been members of the accounting firm's audit engagement team within the one-...
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