SEC Proposes Scaling Back Auditor Testing of Fraud Safeguards

Most US-listed companies would be exempt from requirements they hire an outside auditor to field test safeguards meant to ensure investors can rely on corporate revenue and asset value disclosures, under an SEC proposal unveiled on Tuesday.

The draft rule targets an Enron-era mandate long reviled by corporate managers, who see it as a costly and burdensome hurdle to taking a company public and staying listed in the US.

… “This mandate has done little to prevent fraud,” said John Berlau, director of finance policy at the Competitive Enterprise Institute, in an email. Instead requiring a “full blown external audit of internal controls” kept auditors employed while diverting “company resources away from creating new jobs and beneficial products.”

Read more at Bloomberg Tax