Guidance issued for firms adding new public company clients, professional staff.

• Position: News update - SEC Practice Section issued guidance for U.S. audit firms - Brief Article

In a move to ensure even greater attention is paid to audit firm quality control systems, the SEC Practice Section issued guidance for U.S. audit firms. The special guidance is directed toward audit firms taking on increased numbers of new publicly traded clients and/or professional staff. The guidance comes at time when, following the collapse of Enron, large numbers of public companies may be seeking new audit firms.

"In the wake of Enron, many SEC registrants have changed auditors," said Robert J. Kueppers, chair of the SEC Practice Section. "The resulting influx of new clients and personnel in a short period of time may require a given firm to pay special attention to its quality control systems."

The guidance draws from AICPA professional standards and covers the elements of a firm's quality control system that could be affected by the addition of new clients or personnel including: independence; personnel management, including audit partner rotation and concurring partner review; acceptance and continuance of clients and engagements; engagement performance, including completion of audits in progress, re-audits, quarterly reviews, issuance of comfort letters and discovery of possible mis-statements in...