The SEC requires all proposed audit and permitted
non-audit services provided to the audit client and its
subsidiaries to be pre-approved by the client’s Audit
Committee. There are additional PCAOB pre-approval
requirements for tax services and non-audit services related
to internal control over financial reporting. In addition to
requirements set by the SEC and the PCAOB, IESBA has new
requirements to obtain concurrence from the Audit Committee
prior to providing non-audit services to upstream entities
that control a public interest entity audit client and
downstream entities that the audit client controls,
regardless of whether the controlled entity is consolidated.
These incremental IESBA requirements most significantly
impact private equity firms, registered investment
companies, issuers that control investment advisers, and
issuers controlled by an upstream parent that is not an
issuer. In order for the Audit Committee to make an informed
decision about a proposed service, we need to provide them
with sufficient information about the service, to enable them
to evaluate the potential effects on our independence.