September 4, 2003

Grant Thornton has made a

Grant Thornton has made a big deal announcing that it would not perform certain services involving internal control documentation and evaluation for its audit clients. This falls within the debate noted in “Nugget No. 35” from our “50 Nuggets in 50 Minutes” webcast about the extent to which companies can use their independent auditors to help upgrade and document their internal controls.

As noted in that webcast, the pros of doing so include the fact that the same auditors will be attesting to the controls later – so they are the ideal one to ensure they are “up to snuff” now. The cons of this approach is that independent auditors are limited in what they can do since they will be the entities that later attest to what is developed at their clients – and the SEC has warned that the auditor clearly must be independent when it provides its attestation.

Grant Thornton probably has made such a public announcement of its decision in a bid to attract companies that use one of the Big 4 as their auditors to hire Grant Thornton to perform their pre-attestation work. So far, many companies have hired their own audit firm to perform this service (which may be risky) – but some companies have hired other auditors to do so, including another Big 4 firm.

On September 11th, the SEC is taking its first foray into rulemaking in the Section 402 area to exempt qualified foreign banks from the insider lending prohibition along the same lines as domestic qualfied banks are exempt. Unfortunately, no further 402 rulemakings/interpretations are on the SEC’s horizon.

At the same time, the Commission will also consider whether to propose an amendment to Form F-6 that would add an eligibility requirement making the form unavailable to register American depositary receipts if the foreign issuer has separately listed the deposited securities on a registered national securities exchange.

For subscribers, thanks to Tom White and Connie Neigel of Wilmer Cutler & Pickering for adding model reporting-up policies – one for companies and one for law firms – as well as a model QLCC charter to our “Attorney Responsibility Portal.”