New Ethics Guidance Affecting CPAs' Nonattest Services and Firm Names

Alan Reinstein, DBA, CPA, and Thomas R. Weirich, PhD, CPA

The AICPA's Professional Ethics Executive Committee (PEEC) recently revised Interpretation 101-3, “Nonattest Services,” of its Code of Professional Conduct (ET section 101.05). It also issued two new interpretations— Interpretation 505-4, “Misleading Firm Names” (ET section 505.05), and Interpretation 505-5, “Common Network Brand in Firm Name” (ET section 505.06)—that became effective on August 31, 2012. The discussion below examines these new interpretations and demonstrates how practitioners can implement their provisions effectively and efficiently. Given these interpretations, CPAs should consider the implications of assuming (rather than performing) management responsibilities; in addition, they should recognize any potential “management participation threats,” which must now be reduced to an acceptable level. Finally, a recent exposure draft that could lead to additional future guidance is discussed.