SEC Extends Auditor Vote Skip Rule Without Fanfare
Published Date: 2/12/2026
Notice
Summary
The SEC is asking to keep a rule that lets investment funds skip a shareholder vote when picking their independent auditor, as long as they have an independent audit committee. Fund boards just need to adopt and keep an audit committee charter, which takes about 3 hours one time. This keeps things smooth and saves time without extra yearly paperwork or costs.
Analyzed Economic Effects
3 provisions identified: 0 benefits, 3 costs, 0 mixed.
One-Time Legal Cost to Draft Charter
When a fund adopts an audit committee charter to rely on Rule 32a-4, it may incur a one-time cost to hire outside counsel; the Commission estimates those legal fees average $2,086 per fund. With an estimated 88 new funds per year, the Commission estimates the annual aggregate cost is approximately $183,568.
Shareholder Vote Skipped for Auditor
If a fund has an audit committee made entirely of independent directors and the board adopts and preserves an audit committee charter, the fund can skip submitting the selection of its independent public accountant to shareholders for ratification under Rule 32a-4. The rule permits continuing oversight by the independent audit committee instead of a shareholder vote.
One-Time Time Burden to Adopt Charter
To rely on Rule 32a-4, a fund's board must adopt an audit committee charter; the Commission estimates the one-time time burden per new fund is 2.75 hours (15 minutes to adopt plus 2.25 director hours and 0.5 hour paralegal). The Commission estimates about 88 new funds per year will adopt charters, totaling about 242 hours annually, and there is no annual hourly burden for preserving the charter.
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