An SEC proposal to update its "auditor independence" rules and codify certain staff consultations was published in the Federal Register. Comments must be submitted by March 16, 2020.
As previously covered, the proposed amendments to Rule 2-01 of Regulation S-X would, among other things:
- clarify certain affiliate relationships in common control scenarios;
- lessen the look-back period for domestic first-time filers when assessing compliance with the independence requirements;
- expand the categorical exclusions from independence-impairing lending relationships to include certain student loans and de minimis consumer loans;
- replace the reference to "substantial stockholders" under the "business relationship rule" with a substantial influence analysis; and
- introduce a transition framework that addresses "inadvertent" independence violations that result from corporate events such as mergers and acquisitions.
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