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We note that a determination under the proposed amendments that sister entities are not material to the controlling entity, by itself, does not conclude the independence analysis under Rule 2–01. This is because, as explained above, auditors and audit clients must consider “all relevant facts and circumstances” when assessing independence pursuant to the general standard in Rule 2–01(b).

We believe that the proposed amendments likely would improve the practical application of Rule 2–01, enhance efficiency of rule implementation, reduce compliance burdens, and increase competition among auditors. They also may facilitate capital formation. We request comment on all aspects of our economic analysis, including the potential costs and benefits of the proposed amendments and alternatives thereto, and whether the rules, if adopted, would promote efficiency, competition, and capital formation or have an impact on investor protection. Commenters are requested to provide empirical data, estimation methodologies, and other factual support for their views, in particular, on costs and benefits estimates. IV. Paperwork Reduction Act practices. This proposed amendment is in no way intended to affect the application of the auditor independence rules. The proposed framework requires any independence violations resulting from a merger or acquisition to be corrected as promptly as possible. What is a reasonable period of time after the consummation of a merger or acquisition that would allow for an auditor to correct most types of violations covered by the proposed framework? Should the proposed amendments specify a maximum period of time for such corrections? With respect to the proposed amendments that include unregistered funds within the meaning of the term investment company, for purposes of the ICC definition, [ 82]Respondents are asked to describe the nature of any impact and provide empirical data supporting the extent of the impact. Such comments will be considered in the preparation of the Final Regulatory Flexibility Analysis, if the proposed amendments are adopted, and will be placed in the same public file as comments on the proposed amendments. VI. Small Business Regulatory Enforcement Fairness Act The proposed amendments also may lead to changes in the competitive structure of the audit industry. We expect more accounting firms to be eligible to provide auditing services and be in compliance with proposed Rule 2–01. If the larger audit firms are the ones more likely to engage in non-audit relationships and services, and therefore, are more likely not to be in compliance with the existing Rule 2–01, then these firms are more likely to be positively affected by the proposed amendments. In particular, these firms may be able to compete for or retain a larger pool of audit clients. At the same time, the larger firms' potentially increased ability to compete for audit clients could potentially crowd out the auditing business of smaller audit firms. However, we estimate that the four largest accounting firms already perform 46 percent of audits for all registrants (or about 75 percent of accelerated and large accelerated filers) and more than 80 percent in the registered investment company space. [ 98]

We believe that the proposed amendments would not duplicate, overlap or conflict with other Federal rules. F. Significant Alternatives We propose a technical amendment to convert the current Preliminary Note to Rule 2–01 into introductory text to Rule 2–01, as this is consistent with current We understand that it is more common today for companies to enter into multi-company arrangements in delivering products or services and that audit firms may contribute to such multi-company arrangements, such as through intellectual property or access to data using common technology platforms. Do these arrangements present instances where an auditor's objectivity and impartiality would not be impaired even after considering the proposed amendments discussed in this release? If so, what further amendments should be considered to appropriately focus on relationships where it is more likely an auditor's objectivity and impartiality would be impaired?

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Hence, the negative pair factors of 210 are (-1, -210), (-2, -105), (-3, -70), (-5, -42), (-6, -35), (-7, -30), (-10, -21) and (-14, -15). Furthermore, individual portfolio companies are often audited by different auditors, even when they are within the The potential expansion of auditor choices as a result of the proposed amendments could also allow audit clients to align audit expertise better with the audit engagement, which may lead to an improvement in audit quality and financial statement quality. [ 72] not obtained while a covered person in the firm) is consistent with the current provision in Rule 2–01(c)(1)(ii)(A)(

An accounting firm's independence will not be impaired because an audit client engages in a merger or acquisition that gives rise to a relationship or service that is inconsistent with this rule, provided that: We encourage the submission of comments with respect to any aspect of this IRFA. In particular, we request comments regarding: If we divide 210 by any numbers other than 1, 2, 3, 5, 6, 7, 10, 14, 15, 21, 30, 35, 42, 70, 105 and 210, it leaves a remainder of some value. Hence, the factors of 210 are 1, 2, 3, 5, 6, 7, 10, 14, 15, 21, 30, 35, 42, 70, 105 and 210. Additionally, the current ICC definition includes not just the investment companies that share an investment adviser or sponsor with an investment company audit client, it also includes any investment company advised by a sister investment adviser or has a sister sponsor. [ 26]

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Currently, certain aspects of Rule 2–01 require auditor independence compliance during the audit and professional engagement period, which may include periods before, during, and after merger and acquisition transactions. As a result, certain merger and acquisition transactions could give rise to inadvertent violations of auditor independence requirements. For example, an auditor may provide management functions to a target firm and auditing services to an acquirer prior to the occurrence of an acquisition. As a result, the acquisition may result in an auditor independence violation that had not existed prior to the acquisition. In this scenario, the auditor's objectivity and impartiality is likely not impaired. [ 96] In accordance with the foregoing, the Commission proposes to amend title 17, chapter II of the Code of Federal Regulations as follows: Start Part PART 210—FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975 End Part Start Amendment Part