Academic journal article Journal of Accountancy

"Alternative" Structures and Government Accountants

Academic journal article Journal of Accountancy

"Alternative" Structures and Government Accountants

Article excerpt

As CPAs choose different forms in which to practice public accounting--such as selling their firms to publicly held companies--the AICPA is taking steps to make sure the Code of Professional Conduct keeps up with these new developments. The professional ethics executive committee issued an exposure draft that would ensure application of the code to CPAs regardless of whether they practice in alternative structures or in more traditional practice forms.

The ED uses a hypothetical traditional firm ("Oldfirm") purchased by a publicly held corporation as an example. Some of Oldfirm's owners and employees continue to offer nonattest services on behalf of their new employer, the publicly held corporation. Some Oldfirm partners form "New-firm," owned by a CPA majority, to provide attest services. Newfirm leases employees and office space from the public company parent, which also may provide billing, advertising and other services for NewFirm. In return, Newfirm pays to the public company an amount determined as a percentage of revenues or profits.

The proposed statement addresses the applicability of the Code of Conduct to these alternative forms of practice in three areas: independence (Rule 101), non-CPA ownership (Rule 505) and equality of enforcement of the Code among members in all practice forms (Rule 505).

Code's applicability to government auditors

The ED does not limit itself to alternative structures. …

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