Auditor Independence.

• Position: Brief Article

In testimony before the Senate Banking Committee in late September, FEI President and CEO Phil Livingston said that the organization "completely agrees with the paramount importance of protecting auditor independence," but is troubled by the Securities and Exchange Commission's proposals for broad prohibitions on non-audit services.

"FEI supports the Independence Standards Board (ISB) process, and we would like to see these complex issues resolved within this process, particularly relating to non-audit services," Livingston told the panel. FEI also believes "that the audit committee must remain the focal point for judgments about auditor independence, taking into account the circumstances of the corporation and the audit firm."

FEI supports an update of rules on financial and employee relationships, Livingston added. "We would like to see rules come from the ISB, but we would not object to an SEC rulemaking in those particular areas, because those rules are in urgent need of modernization."

Livingston argued that the SEC's proposals on non-audit services would be open to a "wide range of interpretations." He added, "No one has demonstrated... that all these non-audit services contribute to fraudulent financial reporting. If they did contribute, we would be the first to support strong rulemaking in this...