KPMG of New York resigned as independent auditor for AIM Funds of Houston last December after the accounting firm discovered it was in violation of auditor independence rules, according to a Security and Exchange Commission filing submitted March 27 by AIM.

KPMG resigned due to an "inadvertent" investment in a fund managed by AIM, according to the filing. SEC rules prohibit direct investments by auditors in their audit clients because such investments may jeopardize auditor independence.

AIM has appointed Ernst & Young of New York as its new independent auditor.

In November, new SEC rules regarding auditor independence took effect. The new rules were intended to clarify which non-audit services provided by independent auditors endangered their independent status. The amendments also narrowed the scope of the rules, by limiting the people associated with an auditor to whom the rules apply. According to the SEC, the new rules had no substantive impact on the propriety of direct investment by auditors in audit clients.

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