The Public Company Accounting Oversight Board adopted two independence rules that ban abusive tax shelter sales and clarify what constitutes a material weakness.Proposed in December, the board voted to ban auditors from providing tax shelter advice or selling tax shelters to clients. The board identified three circumstances in which the provision of tax services impairs an auditor's independence:
If the firm enters into contingent fee arrangements with those clients.
If the firm provides services related to marketing, planning, or opining in favor of the tax treatment of a transaction that is a confidential transaction, or if it provides services related to marketing, planning, or opining in favor of a tax treatment on a transaction that is based on an aggressive interpretation of applicable tax laws and regulations.
If the firm provides tax services to certain members of management who serve in financial reporting oversight roles at an audit client or to immediate family members of such persons.
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