Sox Update

PCAOB adopts rules; execs sound off on SOX


By Andi McNeal, CFE, CPA

PCAOB adopts ethics and independence rules and Auditing Standard No. 4To help auditing firms avoid accepting aggressive tax engagements that may place them in the dual role of biased advocate and independent auditor, the Public Company Accounting Oversight Board (PCAOB) has approved several ethics and independence rules that cover tax services and other issues.

Specifically, the Board identified three situations in which the provision of tax services for audit clients impairs auditor independence:

  • entering into contingent fee arrangements with those clients (Rule 3521);
  • marketing, planning, or providing favorable opinions on tax treatments for confidential transactions or for transactions based on aggressive interpretation of tax laws and regulations (Rule 3522 (b)); and
  • providing tax services to members of management who serve in financial reporting oversight roles, or to their immediate family members (Rule 3523).

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