Auditor Independence and the SEC

Paper Summary:

This paper discusses auditor independence and disclosure and how they are strengthened by the Security and Exchange Commission (SEC). The paper discusses how, taken together, Sections 201 and 202 of the Sarbanes-Oxley Act in conjunction with Rule 101-3 of AICPA look to define the limits of independence of auditors. It also describes the purpose of the acts, as well as their exclusions.

Table of Contents:
Introduction
Assuring Auditor Independence in Section 201
Evaluating Non-Audit Services In Section 201
Summary

From the Paper:

"In defining Section 201 the SEC looked at factors that could potentially impede the independence of auditing firms. These factors were considered in the context of collusion, conflict of interest and the potential for influencing accounting of financial results to positively influence auditing results (Anandarajan, Kleinman, Palmon, 2008). The SEC considered all non-audit services and centered on nine specific service areas that are considered to be the most potentially damaging and limiting to auditor independence (Gramling, Karapanos, 2008)."

Sample of Sources Used:

• Catherine Allen, Charles E Landes, Lisa A Snyder. (2007). Navigating the Crossroads of Control and Independence. Journal of Accountancy, 204(6), 42-44,46,48. Retrieved September 1, 2008, from ABI/INFORM Global database. (Document ID: 1396744721).
• Asokan Anandarajan, Gary Kleinman, Dan Palmon. (2008). Auditor independence revisited: The effects of SOX on auditor independence. International Journal of Disclosure and Governance, 5(2), 112-125. Retrieved September 2, 2008, from ABI/INFORM Global database. (Document ID: 1485762111).
• Audrey A Gramling, Vassilios Karapanos. (2008). Auditor Independence: A Focus on the SEC Independence Rules. Issues in Accounting Education, 23(2), 247-260. Retrieved September 1, 2008, from ABI/INFORM Global database. (Document ID: 1500151851).
• Raghavan J Iyengar, Ernest M Zampelli. (2008). Auditor independence, executive pay and firm performance. Accounting and Finance, 48(2), 259. Retrieved September 1, 2008, from ABI/INFORM Global database. (Document ID: 1482178681).
• Deborah Prentice (2006). A Voice Crying in the Wilderness for Auditor Independence: Abe Briloff and Section 201 of the Sarbanes-Oxley Act of 2002. Journal of American Academy of Business, Cambridge, 8(2), 190-195. Retrieved September 3, 2008, from ABI/INFORM Global database. (Document ID: 957239061).

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