AICPA Issues Ethics Exposure Draft

By Ann E. Spaulding, Director of Ethics

The American Institute of CPAs (AICPA) has issued an ethics exposure draft dated June 17, 2002, that proposes revisions to the following interpretations:

101-1A.2-addressing those situations in which a covered member serves as a trustee, executor or administrator of an estate or trust that has a financial interest in an attest client;

101-2-Former Practitioners and Firm Independence. The proposed revision includes specific requirements that a firm professional must follow when he or she accepts a key position with an attest client, and specific policies and procedures related to individual and firm responsibilities when firm professionals are considering employment with, or have become employed by, an attest client;

101-10-The Effect on Independence of Relationships with Entities Included in the Governmental Financial Statements. Revisions are proposed due to the issuance of Governmental Accounting Standards Board Statement No. 34 and the anticipated release of revisions to the audit and accounting guide, Audits of State and Local Governments, in September 2002.

Revisions are proposed to conform the interpretations to the new independence rules, and to make the interpretations more appropriate and consistent with a government reporting model.

Revisions also are proposed to the following rulings:

No. 41 under Rule 101, dealing with independence when a client has custody of a covered member's assets;
No. 70 under Rule 101, dealing with a member's depository relationship with client financial institutions; and
Deletion of No. 77 under Rule 101, dealing with individuals considering or accepting employment with the client.

The New York State Society of CPAs Professional Ethics Committee will draft a response to the exposure draft.
Comments on the draft are due to the AICPA by Aug. 17, 2002. The exposure draft can be found on the AICPA's website at www.aicpa.org.