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PEEC adopts 'Conceptual Framework for AICPA Independence Standards'
Note: The following information was originally published in AICPA NewsUpdate, Vol. 2, No. 2. It is reprinted here with permission.
The AICPA's Professional Ethics Executive Committee (PEEC) has adopted a Conceptual Framework for AICPA Independence Standards and a related revision to Interpretation 101-1, under Rule 101 ("Independence") of the Code of Professional Conduct.
The revision to the "Other Considerations" section of Interpretation 101-1 requires that members use the risk-based approach set forth in the Conceptual Framework when making independence decisions involving matters that are not specifically addressed in the independence interpretations and rulings in the Code.
The Conceptual Framework will assist members in evaluating whether a specific circumstance that is not addressed in the Code would pose an unacceptable threat to a member's independence. In cases in which a threat to independence is not at an acceptable level before the application of safeguards, members are required to document that threat and the safeguards applied to eliminate it or reduce it to an acceptable level.
The effective date is one year after issuance in the Journal of Accountancy in order to provide members with ample time to educate firm personnel and update their internal independence policies and training materials.
Revisions to Ethics Interpretation 501-1
The PEEC also adopted revisions to Ethics Interpretation 501-1, Response to Requests by Clients and Former Clients for Records, under Rule 501 ("Acts Discreditable") that provides guidance to members on their ethical responsibilities when a client or former client makes a request for client records, supporting records or other documents that are in the custody or control of the member.
The revised interpretation clarifies existing guidance and defines new key terms. It requires that client-provided records be returned to the client upon request but that client records prepared by the member and supporting records may be withheld if the engagement is incomplete or there are fees due to the member for the specific engagement.
The revised interpretation will be effective on the last day of the month that it appears in the Journal of Accountancy.
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