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Introduction Auditors play an important role in the ensuring the integrity and reliability of the financial statement for public companies Recently in the United Sates especially the independence and objectivity of auditors has been a major concern and has been brought to the forefront A new rule was then proposed to deal with these concerns This eventually led to the adoption of new requirements that must be followed by auditors in the United States Many user groups had economic consequences at stake and lobbied the Securities and Exchange and Commission SEC to what they believed would be the best solution This was mostly performed through submitting comments to the SEC and through participating in the public hearings held by the SEC to allow discussion on the proposed rule This report will briefly describe independence as it relates to accounting profession identify and describe the new requirements presented by the SEC and then describe the events and circumstances that led to the new requirements being proposed It will also describe and assess the validity of the concerns that were stated at the various public hearings by the affected user groups First a simple but important definition of independence and how it relates to the accounting profession will be presented Auditor Independence Independence is generally understood to refer to a mental state of objectivity and lack of bias An auditor must perform the audit without allowing external factors to alter or effect his or her decisions Douglas Carmichael goes on to relate independence to an auditor directly by stating the auditor must be without bias with respect to the client since otherwise he or she would lack that impartiality necessary for the dependability of his or her findings however excellent his or her technical proficiency may be This definition looks easy to interpret but it becomes hard to determine when an auditor is acting independently Often an auditor does not even realize when their
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