The Public Company Accounting Oversight Board (“PCAOB”) proposed a new ethics and independence Rule 3526, Communication with Audit Committees Concerning Independence, that would supersede the Board's interim independence requirement, Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and two related interpretations. The proposed rule would require a registered public accounting firm to communicate to an issuer's audit committee about any relationships between the firm and the issuer that may reasonably be thought to bear on the firm's independence. The communications would be required both before the firm accepts a new engagement pursuant to the standards of the PCAOB and annually for continuing engagements.
In addition, the Board proposed an amendment to Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles, that would exclude from the scope of the rule the portion of the audit period that precedes the beginning of the professional engagement period. The proposal follows the Board’s April 3, 2007 concept release, which solicited comment about the possible effects on a firm's independence of providing tax services to a person covered by Rule 3523 during the portion of the audit period that precedes the beginning of the professional engagement period, and other practical consequences of applying the restrictions imposed by Rule 3523 to that portion of the audit period.
Please click http://www.pcaob.org/News_and_Events/News/2007/07-24.aspx to access a copy of the proposal.