The revised AICPA Code of Professional Conduct identifies specific circumstances in which auditors can have outstanding loans from an audit client. Such loans include, among others, home mortgages, secured loans, immaterial unsecured loans, automobile loans, and loans fully collateralized by the cash surrender value of an insurance policy. For a detailed discussion of the specific circumstances under which such loans are acceptable, see Section ET 1.260, “Loans, Leases, and Guarantees” of the AICPA code.
As a general rule, the SEC’s auditor independence rules for outstanding loans from audit clients are consistent with those of the AICPA. (The PCAOB does not have separate auditor independence rules relating to outstanding loans from audit clients and instead invokes the relevant SEC rules.) The fact that the SEC permits certain auditor-client loans begs the question of why the SEC representative would state in AAER No. 3554 that “any loan . . . to or from an audit client” is “inconsistent” with auditor independence. Most likely, the SEC representative was simply reinforcing the general principle that auditors should avoid having loans from audit clients.