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SEC Warns Audit Firm Growth Strategies Threaten Independence (1)

Oct. 13, 2021, 10:01 PMUpdated: Oct. 13, 2021, 11:11 PM

U.S. audit firms’ aggressive growth strategies pose a direct threat to their ability to be objective, impartial watchdogs for investors, a pair of SEC officials cautioned Wednesday.

One merger or deal can turn accounting firm advisory clients into audit clients and run headlong into strict U.S. conflict-of-interest rules that require auditors to be independent in both fact and appearance, said Paul Munter, acting chief accountant at the Securities and Exchange Commission. He spoke Wednesday during a Practising Law Institute conference.

As firms’ business relationships and service agreements have grown in number and complexity in recent years, “it creates ...