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. Last Updated: 07/27/2016

SEC Moves to Split Auditors, Companies

WASHINGTON -- The heads of corporate audit teams would be barred from serving one client for more than five years in a row under rules that were due to be considered Tuesday by the U.S. Securities and Exchange Commission.

As the SEC tackles dozens of corporate and accounting reforms ordered by Congress after a rash of business scandals, it also examined rules requiring auditors to keep important audit records for up to five years.

These and other measures were scheduled to go before the SEC in a public hearing. After discussion, the rules were expected to be formally proposed and sent out for public comment.

Auditor independence became an issue in Congress' scandal-driven reform push last summer after it emerged that the accounting firm Andersen won hefty fees as both auditor and consultant to Enron Corp.

Proposed rules coming before the SEC on Tuesday would impose a five-year single-client limit on audit team heads, and a bar on accounting firms' auditing of companies whose managers include a former member of the firm's audit team.

Accounting firms would also have to win approval of a company's audit committee for all audit and non-audit services provided to the company.

Investors would be told more about ties between companies and their auditors under proposed rules.