The proposed amendments to our rules and forms represent another
step in the Board's implementation of our responsibility to oversee
the audits of brokers and dealers.
Although our primary goal is to make the Board's rules apply to
audits of brokers and dealers, it also seeks to conform the Board's
rules to other significant provisions of the Dodd-Frank Act.
These include implementing the Board's authority to share certain
otherwise confidential documents with self-regulatory organizations
and clarifying the Board's enforcement jurisdiction over persons
formerly associated with registered public accounting firms.
This project also provided the first occasion for the Board to
revisit many of the foundational rules it put in place in 2003. It
was also an opportunity to address certain rules that, in practice,
have proven to be either unclear or inefficient.
The proposed revisions to the Board's auditor independence rules
are the product of careful consideration of the differences between
issuers, brokers and dealers.
As the staff described, we are proposing to apply the Board's
auditor independence rules to the audits of brokers and dealers.
This means, for example, that the Board's rule prohibiting
auditors from providing tax services to any person in a financial
reporting oversight role at the audit client would apply to auditors
of brokers and dealers.
I recognize that providing tax services for an executive of a
smaller, non-public broker dealer may not pose the same conflict as
when providing those services to the CEO or CFO of a public company.
Therefore, I encourage commenters to weigh in on whether the Board
should apply this rule differently to auditors of brokers and
I would like to thank the SEC staff for their assistance with
this project. The proposal benefits from extensive consultation and
discussion with the SEC staff, and their insights were invaluable.