How Many Gifts Can Auditors Buy Clients and Still Be Independent?

An audit partner who regularly takes a client to ball games and vacations together probably isn’t independent, though treating that client to one dinner per year probably won’t run afoul of Securities and Exchange Commission guidelines.

The SEC clarified its guidance on auditor independence rules this summer, reflecting current practices and regulatory changes since the last round of revisions in 2011. In addition, the guidance covers prohibited services such as accounting and financial statement preparation and auditor tenure for emerging growth companies.

The regulators “make it clear the nature and frequency of the gifts and entertainment will be considered when ...