Firms need adequate procedures to audit, on a test basis, the completeness and accuracy of information submitted from employees and partners. Firms should have policies, procedures, and controls to monitor a client investment database to ensure that the information is updated as often as necessary to ensure compliance with the independence rules. Firms also should have policies, procedures, and controls to monitor the investments of the firm and its pension and retirement plans and any business arrangements with clients of the firm to ensure that these investments and arrangements do not violate any of the independence rules. Creation of Profession and Firm Disciplinary Mechanism for Independence Violations. The profession and the firms must establish timely and effective disciplinary mechanisms against professionals who violate independence procedures both within the firm and the profession.
Continuous improvement is an important process within any organization today.
In that regard, a process should be established to identify, when necessary, timely and responsive changes in professional quality control standards and the accompanying guidance for improvements. Require Senior Management Supervision of Independence Process. Firms need an appropriate supervisory structure, including assigning responsibility to members of senior management who will have responsibility for ensuring compliance with the independence rules. These individuals should not have profit and loss responsibility. This would include any audit of the financial statements of an SEC registrant, its domestic and foreign subsidiaries or affiliates.