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CAQ and AICPA Issue Joint Member Alert Highlighting Independence Rules

Wednesday, November 19, 2014

Washington, DC – A new member alert issued jointly by the Center for Audit Quality (CAQ) and the American Institute of CPAs (AICPA) provides audit firms with an overview of Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) independence rules. The alert outlines rules applicable to financial statement audit and attestation engagements undertaken for the following non-issuers:

  • Non-issuer broker-dealers that are registered with the SEC as a broker or dealer; and
  • Where the engagement(s) is subject to the requirements of SEC Rule 206(4)-2 (17 CFR 275.206(4)-2) (“Custody Rule”), SEC-registered and state-registered investment advisers, related party custodians, or private funds (e.g., pooled investment vehicles).

The alert addresses the following:

  1. Applicability of SEC Independence Rules
  2. Bookkeeping Services, Including Financial Statement Preparation
  3. Applicability of PCAOB Independence Rules
  4. Other Engagements Subject to SEC or PCAOB Independence Rules

“Independence is a cornerstone of audit quality,” said CAQ Executive Director Cindy Fornelli. “This alert is an important reminder for firms to review the applicable rules and regulations, and to revisit their organization’s policies on this critical issue, as needed.”

“While we often associate the independence rules with the audits of issuers, auditors should be aware of the application of those rules to certain non-issuer audit engagements, such as those of broker-dealers that are registered with the SEC,” said AICPA President and CEO Barry C. Melancon, CPA, CGMA. “This alert is intended to give practitioners an overview of which rules are – and are not – applicable in the course of these engagements.”

This alert serves as a follow-up to the independence guidance provided in the CAQ and AICPA’s original joint alert (Alert #2014-6, “Updates to SEC and CFTC Regulations and Related Audit and Attestation Reports of Brokers and Dealers and Futures Commission Merchants, Including Those That Are Dually-Registered”), issued May 12, 2014. While these alerts aim to highlight areas of focus, they should not be relied upon as definitive or all-inclusive and should be read together with the applicable rules, regulatory updates, standards, and guidance in their entirety.

About the CAQ

The Center for Audit Quality (CAQ) is an autonomous, nonpartisan public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit

Contact: Erica Hurtt, CAQ

About the AICPA

The American Institute of CPAs (AICPA) is the world’s largest member association representing the accounting profession, with more than 400,000 members in 145 countries, and a history of serving the public interest since 1877. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialty credentials for CPAs who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. Through a joint venture with the Chartered Institute of Management Accountants (CIMA), it has established the Chartered Global Management Accountant (CGMA) designation which sets a new standard for global recognition of management accounting.

The AICPA maintains offices in New York; Washington, DC; Durham, NC; and Ewing, NJ. Media representatives are invited to visit the AICPA Press Center at

Contact: Jay Hyde, AICPA

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