SEC vs. AICPA Rules
SEC independence rules (Regulation S-X, Rule 2-01) are often stricter than AICPA rules. For SEC registrants (public companies), the auditor must comply with BOTH sets of rules. When rules conflict, the stricter rule applies.
Prohibited Non-Audit Services
For SEC audit clients, the firm cannot provide: bookkeeping, financial information system design, appraisal services, actuarial services, internal audit outsourcing, management functions, human resources, broker-dealer services, or legal services.
Partner Rotation
Lead audit partner and concurring review partner must rotate off the engagement after 5 consecutive years. They cannot return for 5 years (cooling-off period). This prevents the familiarity threat from becoming too strong.
Cooling-Off Period
Sarah was the lead audit partner for XYZ Corp from 2019-2023 (5 years). She must now rotate off and cannot return to the XYZ engagement until 2029. During the cooling-off period, she can work on other engagements at her firm.