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AICPA adopts new ethics standard
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NEW YORK, June 3, 2008 – The American Institute of Certified Public Accountants adopted a new standard tightening ethics requirements for its members.
Failure to comply with a regulator’s requirements on the use of indemnification and limitation of liability provisions will be considered an act discreditable to the profession.
Regulators like the U.S. Securities and Exchange Commission, state insurance commissions and federal banking agencies presently prohibit organizations under their jurisdiction from entering into certain types of indemnification and limitation of liability provisions in agreements for the performance of audit or other attest services. A new interpretation by the Professional Ethics Executive Committee of the AICPA prohibits members from using their provisions when contracting for audit and other attest services when their employer or client is subject to the requirements of one of these regulators.
“The purpose of this standard is to remind practitioners of their responsibility to comply with regulators,” said Susan Coffey, AICPA vice president for member quality and state regulation. “Current AICPA standards allow certain indemnification and limitation of liability provisions to be included in agreements for audit and attest services. However, in cases where a regulator’s requirements are more restrictive than AICPA standards, our members must comply with the more restrictive standard.”
The PEEC’s standard is effective July 31.