Exactly!so if there is a possibility of an IPO in the next three years (two years for JOBS Act filers) we usually add that client to DESC under the SEC independence ruleset as a precaution.
Okay,so we are taking a conservative approach here so that Service Requests are approved as per SEC ruleset.
Okay, thank you this is helpful.
Once this entity goes public, as per SEC regulations the Auditor should not have provided such impermissible services during the period under audit (look back period)
Why would we want to restrict an entity under SEC ruleset, if the entity is not yet public? We can restrict the entity under AICPA ruleset now and change the ruleset once it is public.
When an entity is expected to file for an IPO. We would restrict the entity under the SEC ruleset to comply with the SEC regulations, where in the Independent Auditor should not have provided impermissible services during the period under audit (look back period).
While those services could be permissible under the AICPA regulations, they might be considered impermissible under SEC regulations.