An international accounting standard-setter has issued a revised set of proposals designed to strengthen the independence requirements for accountants.
The International Ethics Standards Board, an independent standard-setting board within the International Federation of Accountants, has issued a "re-exposure draft" of several proposals it had issued earlier. The latest set enhances two areas of the independence requirements in the IFAC Code of Ethics for Professional Accountants.
The first proposal prohibits independent auditors from providing internal audit services related to internal controls, financial systems or financial statements to an audit client that is a public interest entity, in order to further strengthen their objectivity in carrying out audits.
The second proposal requires that an annual pre- or post-issuance review be conducted by a professional accountant who is not a member of the firm when the revenues from one public interest entity client exceed 15 percent of total firm revenue for two consecutive years. The proposal provides a safeguard against the threat to independence when a firm receives a significant portion of its revenues from a single client.
In related news, the American Institute of CPAs has adopted a new ethics standard for members. Failure to comply with a regulator's requirements on the use of indemnification and limitation-of-liability provisions will be considered an act discreditable to the profession, according to the AICPA. For more information, visit http://www.aicpa.org/download/ethics/EDITED_Adopted_501_8_final.pdf.
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