Newsletter Archives

Spring 2007 Newsletter

Three Key Elements to Enhancing Ethics and Independence Compliance in Accounting Firms.

This issue discusses three key elements that firms should consider to enhance their compliance with the profession’s ethics and independence rules. The elements are broadly categorized as (1) communications and training, (2) assessments and consultation, and (3) personal and professional accountability. To read the newsletter, click here.

Winter 2007 Newsletter

For the complete newsletter, click here.

Do Auditor-Provided Services Impact Client Internal Control?

Statement on Auditing Standards (SAS) No. 112, Communicating Control Related Matters Identified in an Audit, requires the auditor to communicate to management and governance bodies significant deficiencies and material weaknesses in internal control over financial reporting (ICFR) identified during the audit. Apparently, there has been some confusion regarding what impact, if any, auditor-provided services, especially bookkeeping assistance, have on a client’s ICFR.  For complete article, click here.

International Ethics Standards: How they Impact US CPAs

The International Federation of Accountants (IFAC) is the global organization for the accountancy profession. IFAC works with its 155 members and associates in 118 countries to protect the public interest by encouraging high quality practices by the world's accountants and serves the public interest (in part) by developing standards for auditing, education, ethics, and public sector financial reporting. For complete article, click here.

PCAOB Considers Additional Changes to Independence Rules

As part of its proposal to revamp the rules on auditing internal controls, the Public Company Accounting Oversight Board (PCAOB) has proposed that internal controls-related services be subject to additional procedures for audit committee pre-approval. Proposed rule 3525 is similar to PCAOB rule 3524, which applies to audit committee pre-approval of tax services and was approved by the SEC in 2006. For complete article, click here.

AICPA Developments: Harmonization, Tax, Litigation and Investigative Services, Indemnification Clauses

November 30 – December 1, 2006 open meeting, the Professional Ethics Executive Committee (PEEC) discussed a draft framework for the AICPA Code of Professional Conduct (“Framework for Meeting the Objectives of the Fundamental Principles”). The Framework is based on the International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants and is driven by a desire to converge the AICPA Code with international ethics standards. For complete article, click here.

Independence Disclosures in Compilation Reports

AICPA independence rules, including Performance of non-attest services (ET§101.05 of the AICPA Code of Professional Conduct), apply to compilation engagements unless a CPA firm discloses that it is not independent of the client. A compilation report should include such disclosure when the member or his or her firm lacks independence in fact or appearance without stating the reason for the impairment… For complete article, click here.

SEC Staff Remarks regarding Independence: 2006 AICPA National SEC/PCAOB Conference

At the December 2006 AICPA National Conference on Current SEC and PCAOB Developments, staff from the SEC Office of the Chief Accountant (OCA) made several remarks regarding auditor independence. Michael Husich (Associate Chief Accountant in OCA), who has primary responsibility for independence, addressed the following issues… For complete article, click here.

FALL 2006 NEWSLETTER

For the complete newsletter, click here.

Ethical Requirements for Tax Practitioners Still Undergoing Significant Change

Tax practitioners are governed by myriad ethical requirements and have faced numerous changes in recent years. The Public Company Accounting Oversight Board (PCAOB) recently issued Ethics and Independence Rules Concerning Independence, Tax Services, and Contingent Fees. Several months after the last round of changes took effect, the Internal Revenue Service (IRS) is proposing more changes to Circular No. 230. For complete article, click here.

Litigation Clauses in Audit Engagement Letters Getting Attention

An important debate on auditor independence and the use of certain litigation clauses in auditor engagement letters has been brewing the last several months. On June 22, 2006, the Wall Street Journal reported that some 90 companies had disclosed in their proxy statements that their audit engagement letters included clauses that prevent the company from suing the auditor for punitive damages or require that the auditor and company use arbitration or mediation to settle disputes. For complete article, click here.

Is your CPA Firm Aware of all of the Independence and Ethics Rules that Affect the Firm and its Professionals?

Multiple layers of independence and other ethics rules affect the average CPA firm and its professionals. A critical first step CPA firms should take to ensure effective compliance is to have a complete and accurate inventory of the rules and regulations that provide the guidelines for appropriate conduct. For complete article, click here.

AICPA Survey: Compiled Financial Statements and Independence

In fall 2005, the American Institute of CPA (AICPA) Accounting and Review Services Committee (ARSC) surveyed CPAs, their clients, and other users of compiled financial statements about the need for independence in compilation engagements. A follow-up question in the survey asked; if independence should be required, how to communicate a lack of independence in the report, i.e., should the reason for the impairment be provided. The survey attracted over 4,300 responses, mainly from persons in CPA firms consisting of ten or fewer partners. For complete article, click here.

Proposed GAO Yellow Book Revisions Emphasize Audit Quality and Ethics

Periodically, the Government Accountability Office (GAO) revises the “Yellow Book,” or Government Auditing Standards. According to the GAO, “The overall focus of the proposed 2006 revised standards includes an increased emphasis on audit quality and ethics…” The proposal introduces an ethical framework, reorganizes and clarifies existing independence requirements, stresses quality controls, and puts forth new peer review requirements. For complete article,