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Step Away From The Auditor

Thinking of getting to know your "independent" auditor better? Don't push it, says the SEC.

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This story appears in the May 2001 issue of Entrepreneur. Subscribe »

Auditors are fiscal watchdogs for businesses-but sometimes, saysthe , auditors appear a little too cozy withthose they're trained to scrutinize. As a result, theSecurities and Exchange Commission () recently made some changesto make sure auditors remain independent. If you use an auditor tocertify your , don't ignore the SEC'snew rules, which place restrictions on the type of servicesauditors can perform for publicly traded companies. The changes,which became effective in February, will affect an estimated 2,200small companies.

SEC chairman Arthur Levitt, a leader in the campaign to revisethe rules, argued that auditors can't be independent watchdogsif they're advisors to the companies they audit. Formany large firms, services now provide asmaller portion of their revenues, while consulting services havegrown steadily.

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