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O. Other independence
(updated 27 Jun 2019)
us SEC - Audit Independence FAQs
Question 1 (issued December 13, 2004)
Q: Do the Commission's independence rules apply to auditors whose reports are filed with the Commission on financial statements of entities other than those of the issuer?
A: The Commission's independence rules apply to audits of financial statements required by SEC rules, except for those required by Rules 3-05, 3-14, 8-04, and 8-06 of Regulation S-X.
Question 2 (issued June 27, 2019)
Q: Are financial statements provided to investors in offerings under Rule 506(b) of Regulation D required to be audited by an accountant that is SEC independent?
A: Yes. Financial statements required to be provided to investors in offerings under Rule 506(b) generally must comply with Article 8 of Regulation S-X.
Even though Regulation D does not require these financial statements to be filed with the Commission, the auditors of such statements must comply with the SEC independence rules in Rule 2-01. See Question 1 in this section with respect to financial statements required by Rules 8-04 and 8-06.
Question 3 (issued June 27, 2019)
Q: Rule 3-09 of Regulation S-X specifies that under certain conditions separately audited financial statements of an equity investee must be included in the filing. Are these financial statements required to be audited by an accountant that has complied with the Commission’s independence rules?
A: Yes. The accountant must comply with the Commission’s auditor independence rules, even when the accountant is permitted to perform the audit under standards other than the PCAOB’s standards.
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Regulation D requires an issuer conducting an offering under Rule 506(b) to provide, among other things, certain financial information to any non-accredited investors in that offering.
• For offerings of up to $2 million, issuers must provide financial statements that comply with Article 8 of Regulation S-X, except that only the issuer's balance sheet, which shall be dated within 120 days of the start of the offering, must be audited.
• For offerings of up to $7.5 million, the issuer must provide financial statements as would be required in Form S-1 for smaller reporting companies.
• For offerings over $7.5 million, the issuer must provide financial statements as would be required in a registration statement filed under the Securities Act on the form that the issuer would be entitled to use.
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