Academic journal article Journal of Accountancy

Institute Issues Ethics ED and More Q&As

Academic journal article Journal of Accountancy

Institute Issues Ethics ED and More Q&As

Article excerpt

The AICPA Professional Ethics Executive Committee (PEEC) issued an exposure draft (ED), Omnibus Proposal of Professional Ethics Division Interpretations and Rulings (www.aicpa.org/members/div/ethics/ed_outsourcing.htm), that proposes three rulings--two new and one revised--in the Institute's Code of Professional Conduct. Under Rule 102, Integrity and Objectivity, a member would have to inform clients of the use of a third party to provide any professional services for them or on their behalf prior to sharing confidential client information with that provider. Under Rule 201, General Standards, and Rule 202, Compliance With Standards, a member using a third-party provider would be responsible for all work performed by the provider. And under Rule 301, Confidential Client Information, a member using a third party to provide any professional services for or on behalf of a client--or administrative support services, such as record storage or software hosting, on behalf of the member--would be required to enter into a contractual agreement with that provider to ensure the confidentiality of client records.

Susan Coffey, AICPA vice-president, audit quality and professional ethics, said the proposed rule "would clarify the AICPA's requirements." Currently, members are permitted to decide for themselves whether to inform clients that services may be outsourced, and the PEEC's long-standing position has been that members "are ultimately responsible for the quality of any work performed by a third-party provider. …

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