Academic journal article Journal of Accountancy

Institute Clarifies Independence Requirements

Academic journal article Journal of Accountancy

Institute Clarifies Independence Requirements

Article excerpt

The AICPA Professional Ethics Executive Committee (PEEC) in November issued guidance in two parts to facilitate compliance with its rules governing the independence of members who provide nonattest services to attest clients. The two documents, AICPA Interpretation 101-3, Performance of Nonattest Services--Understanding the Client Competency Requirement and AICPA Interpretatin 101-3, Performance of Nonattest Services--Requirement to Document Understanding With an Attest Client, can be viewed at www.aicpa.org/members/div/ethics/intr_101-3.htm.

Those independence rules stipulate in part that members may not perform management functions or make management decisions on behalf of their attest clients; that they must be satisfied, prior to beginning a nonattest services engagement, the client is both willing and able to perform all management functions related to the engagement; and that they must document certain aspects of the engagement, including the client's agreement to oversee the nonattest services. The new guidance more fully explains the nature and extent of such documentation, which is required by Interpretation 101-3, Performance of Nonattest Services. It also provides sample language to document the understanding with clients for the provision of bookkeeping and tax services and contains a series of questions and answers on the competence of the client's senior manager, or other employee, to oversee all management functions associated with the nonattest services engagement. …

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