PCAOB Passes New Independence and Material Weakness Rules

The Public Companies Accounting Oversight Board passed two rules at its public meeting yesterday--[1] for auditors to report on the status of previously-disclosed material weaknesses (for voluntary audits only) and [2] restricting some marketing of tax strategies to audit clients under the doctrine of independence (perhaps influenced by KPMG's troubles with the IRS--this generally will not affect routine tax preparation. The PCAOB in its release (http://www.pcaobus.org/News_and_Events/News/2005/07-26.aspx) also emphasized the need for pre-approval by the audit comittee of auditor-provided tax services. The rules now go to the SEC, which must approve them before they become enforceable.