In Brief: New Conflict-of-Interest Rule for Auditors

Outside auditors must submit an annual conflict-of- interest statement to their publicly traded clients, including banks and thrifts.

Under a rule approved last week by the Independence Standards Board, an auditor must disclose in writing any links with a client that could affect objectivity, such as consulting relationships or job changes. The rule, which is meant to protect investors, is effective for fiscal years ending after July 15.

As part of the same rule, the board required auditors to hold an annual conflict-of-interest discussion with the audit committee or board of directors of each public client.

The Independence Standards Board was established in 1997 by the Securities and Exchange Commission and the American Institute of Certified Public Accountants to set objectivity guidelines for public auditors. Last week's approval was its first ruling.