May 2000

AICPA Revises Ethics Code

The AICPA recently revised two ethics interpretations and one ruling in its Code of Professional Conduct. The changes became effective April 30.

Interpretation 203-2, Status of FASB and GASB Interpretations, now recognizes the Federal Accounting Standards Advisory Board as a designated body to establish accounting principles with respect to federal accounting standards.

Revisions to Interpretation 501-1, Records Retention, add tax and depreciation carryforward information as an example of information that is not reflected in a client's books and records but should be made available to the client. The interpretation also now states that the information should be provided in the medium in which it is requested, provided it exists in that medium. The member is not required to convert information that is not in electronic format to an electronic format. Another change to this interpretation is that the member may require that all fees due be paid before requested information is provided. (The interpretation previously said that the member may require payment for fees with respect to requested information before such information is provided.)

The AICPA also adopted the following new ruling regarding client-sponsored employee benefit plans:

Q. A member or member's firm (member) provides asset management or investment services that may include having custody of assets, performing management functions, or making management decisions for an employee benefit plan (the Plan) sponsored by a client. Would the independence of the member be considered to be impaired with respect to the Plan and the client sponsor?

A. The performance of investment management or custodial services for a Plan would impair the independence of the member with respect to the Plan. The member's independence would also be considered impaired with respect to the client sponsor of a defined benefit plan if the assets under management or in the custody of the member are material to the Plan or the client sponsor.

The revised ruling states that the member's independence would not be considered impaired with respect to the client sponsor of a defined contribution plan, provided the member does not make any management decisions or perform management functions on behalf of the client sponsor or have custody of the sponsor's assets.

The NYSSCPA Professional Ethics Committee recommended to the Society's board of directors that the Society adopt the AICPA revisions, and the board's executive committee will review the revisions at an upcoming meeting. The NYSSCPA publishes all revisions to its Code of Professional Conduct in The Trusted Professional after board approval. *