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SEC Addresses Auditor Independence

June 25, 2019

Amendments adopted by the U.S. Securities and Exchange Commission (SEC) are designed to aid in the determination of whether an auditor's lending relationship with certain shareholders of an audit client impairs the auditor's independence. Rule 2-01(c)(1)(ii)(A) of Regulation S-X, known as the "Loan Provision," generally states that an auditor is not independent when in a lending relationship with an audit client. But the SEC had become aware of certain lending relationships that the existing rules identified as independence threats but did not affect the impartiality or objectivity of the auditor. Read more at the Journal of Accountancy.