Auditors, take note: There are new rules for the type of information you must give audit committees before your work begins.
The PCAOB has adopted Rule 3526, “Communication with Audit Committees Concerning Independence,” which is meant to heighten transparency regarding a firm’s independence. According to the PCAOB, the rule “will require a registered public accounting firm, before accepting an initial engagement, to describe in writing to the audit committee all relationships between the firm or any of its affiliates and the issuer or persons in a financial reporting oversight role at the issuer that may reasonably be thought to bear on the firm’s independence.”
“This is common sense,” PCAOB board member Daniel L. Goelzer told CFO.com. “The new rule will make sure that audit committees have the relevant independence information in front of them when they select the auditor, not after they have already made the decision and the work has begun.”
The board also amended its rule that governs independence as it relates to tax services. The rule now excludes “tax services provided during the portion of the audit period that precedes the beginning of the professional engagement period,” the PCAOB announced.
Both moves must be approved by the SEC before taking effect.