SEC Adopts Amendments to Loan Provision under Auditor Independence Rules

The SEC announced that it adopted amendments to the auditor independence rules relating to the determination of whether an auditor is independent when the auditor has a lending relationship with certain shareholders of an audit client. According to the SEC’s news release, the amendments will focus the analysis on beneficial ownership rather than on both record and beneficial ownership; replace the existing 10 percent bright-line shareholder ownership test with a significant influence test; add a known-through-reasonable-inquiry standard with respect to identifying beneficial owners of the audit client’s equity securities; and exclude from the definition of audit client, for a fund under audit, any other funds that otherwise would be considered affiliates of the audit client under the rules for certain lending relationships.