Ethics and Regulatins Q&As

January 1999 Issue

By Ann E. Spaulding

The NYSSCPA offers assistance for members' questions on ethics and regulation. Inquiries address a variety of topics such as:

Operating a Separate Business
Q. Where do we stand on the issue of setting up a separate business?
A. The Society's Professional Ethics Committee has set up a task force to deal with the issue of operating a separate business. The task force's activities have been on hold pending all the proposals, changes, and events both at the AICPA and the State Education Department. At this time, the committee will be attempting to answer individual inquiries based on the latest information from the State Education Department. However, the dust hasn't begun to settle on the issues of form of practice and operating a separate business, so we must tread slowly and carefully.

Member on Deferred Compensation Committee
Q. A member serves on a committee which administers the client's deferred compensation program. Would the independence of the member be considered to be impaired under these circumstances?

A. Independence of the member would be considered to be impaired, since service on a committee of this type would be participation in management functions. The member could render consulting assistance without joining the committee.

Receipt of Contingent Fees or Commissions by Member's Spouse
Q. May a member's spouse provide services to the member's attest client for a contingent fee or refer products or services for a commission to or from the member's attest client without causing the member to be in violation of rule 302?
A. Yes, if the activities of the member's spouse are separate from the member's practice and the member is not significantly involved in those activities. The member, however, should consider whether a conflict of interest may exist as described in Rule 102 and Interpretation 102-2.

Members with ethics and regulation inquiries should contact Ann E. Spaulding at (212) 719-8348, (800) 633-6320, or aspaulding@nysscpa.org. For a written response, direct correspondence to the Professional Ethics Committee, NYSSCPA, 530 Fifth Avenue, New York, NY 10036-5101. *

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