New Audit Rules Compel Audit Committee Charter Changes - 10 Nov 2008

http://www.complianceweek.com/blog/whitehouse/2008/11/10/new-audit-rules-compel-audit-committee-proxy-charter-changes/

New auditor independence rules taking effect are compelling audit committees to update their proxy reports and their charters.

Howard
Berkenblit, an attorney with Sullivan & Worcester, said a number of
audit committees are just getting up to speed on what they need to do
to comply with the new rule, and they’re finding it requires some quick
document editing.

“The new rule doesn’t change audit committees’ duties at all, but it
is catching some people’s eyes because a lot of audit committee
charters and proxies refer to the old rule,” he said. “If the documents
refer to the old standard, you have to update those to refer to the new
standard.”

The Public Company Accounting Oversight Board adopted Ethics and
Independence Rule 3526 to require audit firms to provide audit
committees with dialogue and written disclosure about where they may
have relationships that could affect the firm’s independence. The rule
places the burden of disclosure on the audit firm, not the audit
committee, said Berkenblit, but it does require the audit committee to
take note of how its communication with audit firms will change as a
result of the rule and to update their proxies and charters to reflect
the new rule.

As a result of the new rule, the Securities and Exchange Commission
adopted a conforming change to proxy rules so that audit committee
reports need to make reference to the PCAOB’s independence rules. The
rules do not require audit committees to reference the rule by name and
number, however, to simplify things in the event of future rule
changes, Berkenblit said. However, firms need to check their
documentation, the law firm advises, to assure it reflects the current rules.