Members of the Professional Ethics Executive Committee of the American Institute of CPAs acknowledged a series of practitioner's concerns with regard to PEEC's revised interpretation of rules governing members who offer non-attest services to attest clients.
At issue for some members attending the AICPA's Fall Meeting of Council, here, were the specifics of Rule 101-3 on performance of non-attest services, and what constitutes independence when non-attest services -- i.e., information technology systems design, appraisal and valuation, bookkeeping, and internal audit outsourcing, etc. -- are provided to attest clients.
Attest clients were defined as recipients of audit review, attestation and compilation services.
PEEC chair Bruce Webb and Sue Coffey, the institute's vice president for audit quality and professional ethics, said that the interpretation, generally effective Jan. 1, 2005, mandates that members cannot make all management decisions and perform management functions, but may provide advice, research materials and recommendations to attest clients.
For the client's part, 101-3 stipulates that one of the key responsibilities is to designate a "competent" employee (usually senior management) to oversee any non-attest services. That ruling brought out a charged response from attendees who questioned whether, for example, a three-person business could designate someone in their employ as "competent" enough to oversee the non-audit work.
PEEC's interpretation capped a three-year effort that began during the fourth quarter of 2001, when the committee added the project to its agenda to ensure independence when a member provides non-attest services to an attest client.
Coffey and Webb told attendees that 101-3 guidance had a link on the institute's Web site at www.aicpa.org, and Coffey added that the institute is helping members with the interpretation via Webcasts, a peer review hotline and establishing a standing PEEC task force.
