Audit Conduct

call (631) 849-2392

AICPA Proposes Revisions to Independence Rules for Information System Services

Today, the AICPA’s Professional Ethics Executive Committee (PEEC) proposed revisions to the  independence rule under 1.295, Nonattest Services, of the AICPA Code of Professional Conduct that applies when a member performs information systems services to an attest client. If adopted, the proposed interpretation, Information System Services, would replace the current interpretation entitled, Information Systems Design, Implementation or Integration (ET section 1.295.145).

Key elements of the new rules include:

  • Definition of "Financial information system" as an information system that aggregates source data underlying the financial statements or generates information that is significant to the financial statements or financial processes as a whole.
  • The interpretation distinguishes systems-related services on the basis of whether they relate to a financial information system (as defined), with rules applicable to financial information systems being more stringent to protect against self-review threats to independence.
  • A provision that would allow a member to design or develop a template that performs a discrete function (e.g., depreciation calculation) in a financial information system if the template does not perform an activity that, if performed directly by the member, would impair independence.
  • Descriptions of the various types of implementation services related to commercial (pre-packaged) off-the-shelf financial information system software, that is, installation, configuration, data translation, interfacing or customization services, and their impact on independence.
  • Clarification of the kinds of system and network maintenance, support or monitoring services members may perform post-implementation on an information system, and that taking on the responsibility for an ongoing function, process or activity would impair independence. (The proposal provides examples of services that would or would not impair independence.)

See the Exposure Draft for all the details.  An article I wrote for the Journal of Accountancy providing highlights is available here.

Comments on this proposal are due by June 15, 2018.  If adopted, the final interpretation would become effective one year after the interpretation is published in the Journal of Accountancy.