Numeric
Citation
Issue of
Concern
Description of Concern
0.000.000 Editorial
Suggestion
Modernized the Preface especially to accommodate
for members in business and part 3 members
0.100, .400.38 and
many other places
"practice of
public
accounting."
There are about a half dozen states that still use the
term "practice of public accounting" or "practice of
public accountancy" in their statutes. While this term
is no longer used in the UAA, it is still used in a very
general way in some states. Is it possible for the
AICPA to use a variation of the terms seen in the
IESBA Code of Ethics for Professional Accountants:
"Member in Public Practice" rather than the current
term "Member in the Practice of Public Accountancy."
This will require a change in the definitions of a
"firm" and "practice of public accountancy" but the
IESBA Code provides a clear roadmap for how to do
this. Such a change would be very helpful for some
state boards of accountancy.
0.100.000 Name of Topic The title of this topic is inconsistent between the
Preliminary Codificaiton Framework and the Draft
Content. Recommend the title in the Preliminary
Codification Framework be revised to read
"Strucuture of the Code of Professional Conduct".
0.100.000 Structure of
Code
Rename this title "Structure and Content of the Code of
Professional Conduct". Add a subheader called "Principles
and Rules of Conduct" to the top of the item and move .01 -
.04 of 0.200 here.
0.100.000 Structure of
Code
I think that the first paragraph of the extant Code
provides a better introduction. Explaining the
structure is helpful but should go after the section on
applicability, rules and interpretations and
compliance.
0.100.01 Other The first paragraph of the Preface seems to be
repetitive, it should be condensed. I would propose
the following:
The Code of Professional Conduct of the American
Institute of Certified Public Accountants (AICPA Code)
consists of this preface, which applies to all members.
The term member, when used in part 1 of the AICPA
Code, applies to and means a member in the practice
of public accounting; when used in part 2 of the AICPA
Code, applies to and means a member in business;
and when used in part 3 of the AICPA Code, applies to
and means all other members.
0.100.02 Editorial
Suggestion
And apply the more restrictive provisions? This
wording is too loose; embellish on this statement.
What should members do once they consult all
applicable parts of the Code?
0.100.03 Editorial
Suggestion
Suggest some editorial revisions to the words and
that the full ET reference either be included or ET be
defined.
0.100.04 Cross
References
There should be a hyperlink for “Definitions”
0.100.04 Editorial
Suggestion
Suggest we add an example when a defined term
does not appear in italics.
0.100.05 Editorial
Suggestion
Suggest some editorial revisions to the words.
0.200.000 Editorial
suggestion
Rename this title "Application of the AICPA Code".
0.200.01 Editorial
Suggestion
Delete prior reference: Introduction since same as .02
0.200.01 Other "The principles provide the framework for the rules
that govern the performance of professional services
by members ." Does the use of "professional services"
this adequately cover members in business and
industry, educators, and other members?
0.200.01 OtherIf the Preface applies to all members, references such
as this, to professional services (as currently defined),
will not scope in all members bound by the Code.
0.200.02 Other Suggest the phrase "as with all standards in an open
society" be deleted.
0.200.02 Other The phrase "as with all standards in an open society" -
is this needed? Can it be modernized? Sounds like the
cold war.
0.200.02 Structure of
Code
The paragraph on compliance doesn't fit well into this
section could it be included in an introduction or
under a separate heading?
0.200.03 Editorial
Suggestion
Switch the order of .03 and .04. Suggest the PCAOB be
added. Run on sentence…we had to read this several
times to be clear on the meaning. Here and
throughout the codified Code, an effort should be
made to avoid lengthy, complex paragraphs and run-
on sentences as they detract from the reader's ability
to comprehend the meaning of the guidance.
Consideration should be given to breaking up these
paragraphs and sentences into shorter sentences. We
have revised a few of these paragraphs/sentences in
the Code to demonstrate.
0.200.03 Editorial
Suggestion
Delete prior reference: Introduction since same as .04
0.200.03 Other Is the wording of this paragraph sufficiently
comprehensive? (e.g. DOL, GAO, or other
international organization? Paragraph on other
guidance belongs after the paragraph on
interpretations based on the heading.
0.200.04 Editorial
Suggestion
PEEC should be written since first occurrence of its
name
0.200.04 Editorial
Suggestion
Not sure if last sentence is necessary regarding
1/12/1988 date
0.200.04 Editorial
Suggestion
Is the last sentence still necessary and if so, is PEEC
the appropriate senior committee or is there another
senior committee that can revise the Code? If there
isn't, is there a reason why PEEC isn't used instead of
the general phrase "appropriate senior committee"?
0.200.05 Editorial
Suggestion
Paragraphs .06–.10 that follow were initially adopted
on January 12, 1988, and subsequently revised on XX
XX, 2013.
0.200.05 Editorial
Suggestion
Suggested editorial revisions.
0.200.06 Editorial
Suggestion
Don't members have to adhear to the principles and
interpretations and not just the rules?
0.200.07 Editorial
Suggestion
What is the term "section" referring to? Paragraphs .05 to
.10? Topic 0.200? Or all of Part 0? It's not clear. This should
be aligned with the standard language used in the Code to
refer to parts, topics, subtopics, etc. Also, suggest some
editorial revisions.
0.200.08 Editorial
Suggestion
Last word should be changed from herein to therein.
0.200.08 Other Is the term "professional services" broad enough to
scope in all category of members?
0.200.08 Other Does the definition of "professional services" include
members in industry?
0.200.08 b Editorial
Suggestion
Do not have link to Compliance with Standards and
Accounting Principles rules - not sure how to handle
since it goes to 2 sections?
0.200.08 c & d Editorial
Suggestion
After the term "ethics" add in "and independence
requirements" to be consistent with the phrase as it is
used later in the paragrah.
0.300.00 Other The Principles of Professional Conduct should be
reviewed to make sure that it appropriately covers
members in business.
0.300.010 Other The term "responsibilities to the public" is vague.
CPAs have a responsibility to certain users of the
financial statements, but not "the public." Logically,
"the public" is simply a collection of persons and a
collection cannot have a single, defined "public
interest."
0.300.020 Other Both terms add nothing to the paragraph. However
they do detract from the message of professionalism
by implying that, regardless of the profession's best
efforts, the "confidence" of the "public" can trump
good work, and that if the whole "collective" doesn't
pull together the CPE profession is somehow
diminished.
0.300.020.01 Editorial
Suggestion
Sugeest "sensitive professional judgments" be deleted since they don't know what it means.
0.300.020.02 Other The phase "improve the art of accounting" as well as
other lanugage in topic 0.300 seems to lean heavily
towards members in the practice of public
accounting.
0.300.030 Other Terms such as "the public interest," "public trust,"
"serving the public," etc. are not definable and thus
are invalid concepts. This acts as a detriment to the
profession and expands the scope of CPA
responsibilities well beyond logic and reason. The
adherence to professional standards and objective
reality gives rise to certain specific responsibilities to
"non-clients." Vague terms such as "collective well-
being" and "faith the public reposes" are open-ended
and imply that the responsibility of the CPA is not only
essentially unlimited in scope but undefinable. Well-
being applies only to individuals and it is not a
collective concept. Further, the profession's
excellence is based on rigorous standards and quality
performance; whether one person or another has
"faith" in the profession is totally irrelevant.
0.300.040 Other I have read many of the sections of the Ethics
Principles in the past and the new revised format
highlights the key elements which puts the reader on
better notice. The example I would cite would be to
Integrity 0-300-040.03 and .04. Each of the elements
were contained in the prior Code, they now are
highlighted in the current presentation. This same
comment applies throughout my reading of the
Revised Code.
0.300.040 Other Since the public trust cannot be defined it cannot
derive from anything. Integrity is the consistent
application of philosophical principles so the
principles must be valid. Since the public trust cannot
be defined, personal gain has no relation to this
invalid concept. The concepts of "right" and "just"
imply a standard, but the standard is not defined
here.
0.300.050 Other The term "public responsibility" should be replaced
with a reference to specific non-clients. Responsibility
is a term applicable only to individuals. Therefore, a
CPA has no "responsibility" to "the public" as an
undifferentiated mass since the nature of this
"responsibility" cannot be determined rationally.
0.300.050.01 &.04 Editorial
Suggestion
This language should be conformed to be consistent
with the Conceptual Framework - i.e., independence
of mind, in appearance. Also, to be consistent with
other areas in the Code should just use the phrase
"attestion standards" instead of "auditing and other
attestation standards".
0.300.050.03 &.04
&.05
Editorial
Suggestion
Shouldn't the term "member in public accounting" and
other such references, be to members in the practice of
public accounting, as defined?
0.300.050.05 Editorial
Suggestion
They suggest a number of editorial revisions in this
paragrah from identifying what kinds of members (e.g.,
members in business v. public practice) and replacing audit
with attest and gaap with all relevent professional
standards.
0.300.060 Other The term "responsibility to the public" should be
replaced with a reference to specific non-clients.
0.300.060.02 Other As noted above, at times, this section seems to focus
heavily on members in the practice of public accounting,
probably a function of when it was written. Are PEEC and
staff sure that the language throughout appropriately
reflects the requirements that other members are obligated
to comply with?
0.300.060.04 Editorial
Suggestion
Remove the term "personal".
0.300.070 Other There is no "public interest principle" that can be
defined rationally. The real issue is that professional
services should be performed in accordance with the
professional standards; this stands on its own without
reference to invalid concepts.
0.300.070.01 Editorial
Suggestion
Change to "member in the practice of public
accounting".
0.300.070.03 Editorial
Suggestion
Suggest edit and suggest the last sentence "No hard-
and-fast rules can be developed to help members
reach these judgments, but they must be satisfied
that they are meeting the spirit of the principles in
this regard" be deleted since it is inconsistent with
101-3.
0.300.070.04 b Editorial
Suggestion
Suggest revision to this bullet "determine, in their
individual judgments, whether the scope and nature
of other services provided to an attest audit client
would create a conflict of interest impair
independence in the performance of the attest audit
function for that client" becuase it is not in line with
101-3.
0.400.000 Other The "public interest," "public trust," etc., are not
listed in the Definitions section. Since these terms
cannot be defined, none of them should be used as if
they had a specific meaning anywhere in the Code.
0.400.01 Other Should there be a mention here about derivations? For
example, member's, client's, etc. will be called out just as
member and client will. Also, change 2012 to 201x. Also,
The placement of this guidance seems to suggest that this a
matter of great importance to members…but, is it? Perhaps
this is better placed at the end of 0.400? . In our comment
below, we were referring to the use of possessive nouns
(e.g., client's), rather than the proposed wording (e.g.,
decision of the client), and explaining at the beginning of
Topic 400 that, for purposes of the codification, derivations
carry the same meaning as the original defined term (e.g.,
client). Using derivations would, in our view, help to make
the codified language less wordy and cumbersome.
0.400.02 Cross
References
The link for “financial statement attest client” is not
functioning properly.
0.400.02 j Editorial
Suggestion
Replace "and they are" with "which is".
0.400.03 Editorial
Suggestion
Believe the definition of attest client should be
reconsidered because no other independence rule set
requires independence of the engaging party. If it
stays, recommends the "or" be replaced with "and, if
different, the person or entity".
0.400.04 Definitions The SSARS considers compilations to be attest
engagements irrespective of whether or not the
accountant's independence is impaired. Can the
definition be modified to address this inconsistency
between the two sets of standards? For example :
An attest engagement is an engagement that requires
independence, as defined in the professional
standards of the AICPA, or in the case of a compilation
performed by an accountant who is not independent,
requires disclosure in the accountant's report of that
fact.
0.400.04 Definitions Attest - Can we provide a definition of attest rather
than a general reference to where the definition can
be found? It is not clear where a comprehensive
definition of attest can be found. The UAA has a
definition but I know that that will hopefully chang to
incorporate the new SOC reporting.
0.400.04 Editorial
Suggestion
Recommend the phrase "defined in the professional
standards of the AICPA" be replaced with "set forth in
the AICPA Statements on Auditing Standards,
Statements on Standards for Accounting and Review
Services, and Statements on Standards for Attestation
Engagements (AICPA, Professional Standards AU, AR,
AT)"
0.400.06 Definitions The meaning of Beneficially owned has changed:
Prior reference states that “A financial interest is
beneficially owned when an individual or entity is not
the record owner of the interest…”
New reference states that “A financial interest is
beneficially owned when an individual or entity,
regardless of whether it is the record owner of the
interest…”
0.400.07 Definitions Item a. in the definition of client is unclear. Because
entities engaged in the practice of public accounting
are excluded from the term employer which is in turn
excluded from status as a client, it appears to follow
that members employed by CPA firms or
governmental audit entities should be considering
their employers to be clients. I am not certain that is
what was anticipated or that that interpretation
would work as it pertains to independence.NY's
definition of client is: "A client is any person or entity
that directly engages a member or a member’s firm to
perform professional services, or a person or entity
with respect to which professional services are
performed, other than the member’s employer,
student or the public." Their code can be found at
http://www.nysscpa.org/prof_library/codeconduct.pd
f
0.400.07 Definitions They recommend the phrase "or a" be replaced by
"and if different the" . Also recommend the term
"paragraph" be replaced by "definition". Also, with
respect to the item a. recommend this item apply not
just to entities engaged in the practice of public
accounting but persons as well.
0.400.10 Definitions Suggest edits to the defintion.
0.400.16 Definitions If the definition of an attest engagement is modified
as suggested above, this definition can be modified to
eliminate "when the member's compilation report
does not disclose a lack of independence." The
service should define whether or not a client is an
attest client, not the fact as to whether or not the
accountant is independent.
0.400.18 Definitions The use of the word “Firm” throughout the Code is
not clear. Does the word Firm mean Client Firm?
Does the word Firm mean Industry Employer Firm?
Does the word Firm mean Any Company? I would
like to see the word Firm have meaning specifically to
CPA firms, and I would like to see industry employers
and other companies like staffing firms and non-CPA
consulting firms included as separate definitions. At
the very minimum I would like to see incorporated a
single paragraph definition of exactly what “Firm”
means with all of its different meanings. It is
confusing to CPAs and the public in the single use of
the word “Firm” to mean CPA Firm, Industry
Employer, Staffing Firm, nonCPA Consulting Firm.
0.400.18 editorial
suggestion
.01 I believe it would be helpful and better
understood. if shown as plural, although technically
there is one Rule. Firm. A firm is a form of
organization permitted by law or regulation whose
characteristics conform to resolutions of the Council
of the AICPA and that is engaged in the practice of
public accounting . A firm includes the individual
partners thereof, except for purposes of applying the
Independence rule. For purposes of applying the
Independence rules, a firm includes a network firm
when the engagement is either a financial statement
audit or review engagement, and the audit or review
report is not restricted, as defined by professional
standards. [Prior reference: paragraph .11 of ET
section 92]
0.400.18 Editorial
Suggestion
Suggest that the phrase "as defined by professional
standards" be replaced by "as set forth in the AICPA
Statements on Auditing Standards and Statements on
Standards for Accounting and Review Services (AICPA,
Professional Standards AU, AR)"
0.400.19 & .400.39 definition of
professional
services and
definition of
holding out
The definition of professional services includes all
services performed by a member while holding out as
a CPA. Many members in large firms perform services
of licensed CPAs, but do not use CPA on their cards
and do not indicate that they are CPAs other than
they have a CPA license. Is it clear a member is
performing professional services and holding out by
the act of holding a CPA license even if they hold out
in no other way?
0.400.24 Editorial
Suggestion
Suggest this definition be removed since the term
only appears once.
0.400.26 Definitions Suggest the definiton be moved out of the definition
section and into 1.270.020.01 since the term only
appears in this interpreation.
0.400.27 Editorial
Suggestion
Given the rise of SSAE engagements, particularly the
relocation of SAS 70 to SSAE 16, the phrase "the
subject matter of the attest engagement" is very
useful. Consideration should be given to employing
this phrase in other parts of the Code (e.g.,
Interpretation 101-3 - Subtopic 1.295), rather than
solely relying on "audit-centric" language.
0.400.30 Definitions Suggest the phrase "the term" be added to the
defintion.
0.400.31 Editorial
Suggestion
Suggest a(n) be used so that the "a" and "an" can be
eliminated before each term.
0.400.34 Editorial
Suggestion
This is true in a number of situations, not just with
respect to financial institutions and broker-dealers.
The statement could therefore be misleading. As the
Code already addresses this concern, globally, in
0.200.03, we suggest that this paragraph be deleted.
0.400.36 and
1.810.020.01
Definition of
partner
The defintion of partner on p. 31 includs proprietors
and shareholders who may not be parties to a
partnership agreement, whereas only members who
are parties to a firm's partnership agreement should
hold temselves out as partners on page 153. Are
these two definitions consistent with each other? Do
they need examples for clarity?
0.400.38 Definitions The definition of the practice of public accounting is
much broader in NY and would pull in individuals that
the AICPA Code would not consider to be in the
practice of public accounting. Because of the differing
uses of the term, it is particularly important that the
AICPA code definition of the practice of public
accounting be very clear. I believe the current
language is difficult to interpret because the definition
refers to work performed for a client, and the
definition of client appears to include a CPA firm
within the term client with regard to the members it
employs. Moreover, there seems to be some
circularity in that the definition of the practice of
public accounting refers to work performed for a
client and the definition of a client refers to entities
engaged in the practice of public accounting. Their
definition can be found at:
http://www.op.nysed.gov/prof/cpa/part70.htm#defi
0.400.38 Language The paragraph refers to "litigation support services",
but the professsional literature has migrated to the
more expansive definition of "forensic accounting".
The current use of "litigation support services" is no
longer supported by the underlying structure of the
AICPA (the Forensic and Valuation Services Executive
Committee) nor by the literature that is being
disseminated by that group.
0.400.40 editorial
suggestion
I believe we should add "applicable" before
"authoritative regulatory bodies" in item (c), so that it
is understood need to pay attention if only applies to
engagement in particular.
0.400.40 Editorial
Suggestion
Public Interest Entity - prior reference should be ET
section 100-1 not 101-1
0.400.41 Definitions Safeguards - Safeguards do not necessarily eliminate a
threat or reduce a threat to an acceptable level. It
depends on the nature of the threat and the
effectiveness of the safeguard. I think that the
definition should be reworked, or you could just
remove the words "to an acceptable level".
0.400.41 Editorial
Suggestion
Safeguards - prior reference should be ET section 100-
1 not 101-1
0.400.44 Editorial
Suggestion
Source Documents - prior reference should be ET
section 101 not 101-1
0.500.01 Editorial
Suggestion
Suggest some editorial changes.
0.500.02 Editorial
Suggestion
Suggest some editorial changes.
0.600.010 bullet 18 Editorial
Suggestion
Suggest wording change.
0.600.010 bullets 1,
2 and 18
Editorial
Suggestion
Suggest wording changes to the titles of the
interpretations.
0.600.010.01 Editorial
Suggestion
Suggest the first paragrah be presented before
0.600.010 as a lead in.
0.600.020 Editorial
Suggestion
Suggest wording change.
0.700.01 Editorial
Suggestion
Suggest the term "standards" be replaced by
"interpreretations".
1.000.000 Editorial
Suggestion
My concern (also shared by my colleagues at GAO) is
without specifically referring to members in
government, we do not recognize what part of the
restructured code we fall into. As you mention in the
cover letter for the pilot testers, there are three parts
divided by the member’s practice. Part 1 is applicable
to members in the practice of public accounting. I can
argue that GAO, Federal IGs, and many state and local
governments are very similar to public accounting in
what they do, but we are also employees of the
government. Part 2 is applicable to members in
business. Some may argue that CPAs that are in
internal audit functions or are in financial
management functions in the government may be in
Part 2. Part 3 is applicable to all other members such
as those who are retired or unemployed. A literal
reading of this criteria would place all CPAs in
government under part 3. This is not logical since I
think there should be government members that fall
under the other 2 parts. Without explanation of the
applicable part to the range of members in
government, the codification is difficult to apply to
these members. Since I also serve on GPAC, I need to
point out that about 12,000 members are employed
in government. Without a clear guidance on which
part of the codification applies to these members, it is
very difficult to use.
1.000.01 Editorial
Suggestion
Change the term "member" in the first sentence to
"members".
1.000.01 Editorial
Suggestion
Introduction of Part I - do not think we want to list
discussion as .01 b/c it might be confusing with
Conceptual Framework which is 1.000.010
1.000.01 Members in
government
I think the codification could provide more examples
of members in government and when members in
government would fall under "members in public
practice (my term)" vs. members in business. Existing
interpretations just need more examples so that it is
clear to members in governement, particularly for
members who work for eleted governmental
auditors.
1.000.01 Other The intro paragraph to Part 1 identifies members in
the practice of public accounting as the people to
whom the Part 1 applies. Many government auditors
perform work that this part would apply to but they
are not "in the practice of public accounting" in
accordance with the definition (0.400.38): "The
practice of public accounting consists of the
performance for a client by a member or member’s
firm, while holding out as a CPA or CPAs, the
professional services of accounting, tax, personal
financial planning, litigation support services, and
those professional services for which standards are
promulgated by bodies designated by Council."
1.000.01 Other I'm not sure where the best place is to address this is
but I'm unclear as to the applicablity of the Code to
auditors performing GAAS audits but are not
members - a description that fits many government
auditors. AU-C 200 indicates that "The auditor should
comply with relevant ethical requirements relating to
financial statement audit engagements" and
references par. .A15–.A20, which in turn says that
"The auditor is subject to relevant ethical
requirements relating to financial statement audit
engagements. Ethical requirements consist of the
AICPA Code of Professional Conduct together with
rules of state boards of accountancy and applicable
regulatory agencies that are more restrictive." Does
that mean that the Code is incorporated into the SAS
by reference for everyone, not just members? And if
it is, does that mean that non-members can disregard
the code because it only applies to "members" and
still audit in accordance with the SAS?
1.000.010 Conceptual
Framework
After reading the information here that appears to be
properly located in the guidance, I am not sure the
guidance needs to be repeated on page 54 in section
1.210.010 addressing the conceptual framework and
the listing of threats and safeguards. This just appears
to be redundant.
1.000.010 Editorial
Suggestion
Should we not include in this section that the member
needs to document their analysis if they use the
conceptual framework?
1.000.010.04/.05 Editorial
Suggestion
Why not include these definitions in 0.400
(Definitions), as with the term "Safeguards" below, as
these terms are used throughout the Code?
1.000.010.05 Editorial
Suggestion
Threats. Relationships or circumstances that could
compromise a member’s compliance with the rules.
1.000.010.06 Editorial
Suggestion
Suggest the term "perform" replace the term "apply"
in this sentence "Members should apply three main
steps in applying the conceptual framework
approach":
1.000.010.06 Editorial
Suggestion
Bold font for headings:
a. Identify threats
b. Evaluate the significance of a threat
c. Identify and apply safeguards
1.000.010.10 Conceptual
Framework
In paragraph 10 of page 41, it might be useful to add
something to address a member or firm actively
promoting client products or services. For example, if
CPA firm has attest client that develops software and
the CPAs within the CPA firm ask their other clients to
consider using that particular software or if CPA firm
has an attest client that owns/operates several auto
dealerships and the CPAs within the CPA firm ask their
other clients to consider using those dealerships for
leasing automobiles.
1.000.010.10 Editorial
Suggestion
Consistency in writing style of examples for instance b
- "a firm acts…" but c - A firm underwriting…."
Throughout section but this is just one example
1.000.010.10 Editorial
Suggestion
Why address independence threats here if Topic
1.200 has its own Conceptual Framework? It will only
confuse matters for members to comingle the
discussion of ethics and independence threats. Given
the existence of a Conceptual Framework devoted
exclusively to independence matters, shouldn't this
framework focus on the threats to compliance with
the other ethics rules of the Code and the appropriate
safeguards to apply?
1.000.010.10 Language The paragraph refers to "litigation support services",
but the professsional literature has migrated to the
more expansive definition of "forensic accounting".
The current use of "litigation support services" is no
longer supported by the underlying structure of the
AICPA (the Forensic and Valuation Services Executive
Committee) nor by the literature that is being
disseminated by that group. The term litigation
support is no longer the apporpriate reference to this
area of practice
1.000.010.10 Structure of
Code
Conceptual Framework Approach - Advocacy threat -
Includes consideration of independence. Since there
is a separate conceptual framework for independence
is this needed here?
1.000.010.12, .13,
.14, .20a & b, .21f,
22h, m,n, r,s,v and
y.
Conceptual
Framework
Do you want to include an example of an
independence threat in the broad concepual
framework?
1.000.010.14 Other Self review threat is proposed to include a" member’s
immediate family or close relative" and "d. The
member’s immediate family is employed by, or
associated with, the client in a key position. " I don’t
see work that my spouse performs as a self-review
threat but rather a familiarity threat. This doesn't
seem to belong here and looks like a change from the
extant and I didn’t agree with it.
1.000.010.19 Drafting
Convention
This sentence is redundant - "In addition, threats may
be sufficiently mitigated through the application of
other safeguards not specifically identified
herein."….PwC suggests that a period replace the
semicolon and the "t" be capatalized.
1.000.010.21 editorial
suggestion
A governance structure, such as an active audit
committee,that is desinged to ensure appropriate
decision making, oversight, and communications
regarding a firm's services.
1.000.010.22 editorial
suggestion
Awkward sentence structure.
1.000.010.22 y Conceptual
Framework
In the listing, why wouldn't item 'y' apply to any
member of the attest engagement team?
1.000.020.01 Editorial
Suggestion
Eliminate the phrase "or legal standards, or both."
The law is not a "standard," since standards can only
be established rationally and objectively and not
politically. Also, placing a requirement for CPAs to
adhere to "legal standards" presumes CPAs should be
experts in the law.
1.000.020.02 c. Drafting
Convention
Reference to "internal procedures" is not clear.
1.000.020.02/.03 Editorial
Suggestion
The accountancy boards require compliance with the
professional standards, not expertise in "rules and
law." There are other references in this section that
refer to potential legal issues without using the "legal
standards" phrase or implying expertise in the law.
1.000.020.04 OtherIs this reference to another "organization that employs the
member" relevant in Part 1 of the Code? If it relevant, why?
Perhaps it would be worth explaining here.
1.000.020.06 Drafting
Convention
"will in all likelihood be a violation of one or more
rules" - Not sure that this is true. Can we rephrase
this? Change to "may"? In the example in paragrahp
.01, if the member doesn't report the fraud, no
violation has occurred.
1.110.010.01 Drafting
Convention
First 2 sentences are akward.
1.110.010.01 Editorial
Suggestion
Integrity & Objectivity Rule not linked to rule
1.110.010.01 Editorial
Suggestion Suggest the term "has a relatinship with" be replaced by "is
associated with" and replace "relationship" with
"association". Also, note that the phrase "the client or
other appropriate parties may view as impairing the
member’s objectivity" Vs. the "reasonable and informed
third party" standard established in the definition of
"acceptable level" in 1.000.010.04. Threats to objectivity
are supposed to be measured against what a reasonable
and informed third party with knowledge of all the relevant
information would view as acceptable or not acceptable.
1.110.010.01b Editorial
Suggestion
Change "who" to "that".
1.110.010.01l Editorial
Suggestion
Suggest that the term "entity" be changed to
"company" to be consistent with item 1.110.01001k
1.110.020 editorial
suggestion
I believe you should state, director of an entity, such
as a bank….
1.110.020 editorial
suggestion
I believe the extant ER 85 was more informative, and
understandable as to why the rulings contained the
conclusions about not accepting a bank director
position, since such a position puts individuals is
questionable situations dealing with the public, which
is not necessarily true with dealing in any directors
position. I think the concept is lost with a change to
"director".
1.110.020.01 Terminology Reference is made to "fiduciary duties" but it is not a
defined term in the Code. Have you considered
incorporating a definition? I am very much aware
that it is a legal concept, but it may provide the
member some awareness by making it a defined term
in the Code.
1.120.010.01 Editorial
Suggestion
Suggest the phrase "the term" be added after the
phrase "For purposes of this interpretation,"
1.120.010.02 Editorial
Suggestion
Do not have link to Integrity and Objectivity rule
1.130.010 Name of
Interpretation
Title - Can we remove the word "knowing"?
1.130.010.01 editorial
suggestion
Can we add a colon after "knowingly"?
1.130.010.01 Editorial
Suggestion
A member would have knowingly misrepresented
facts be in violation of the Integrity and Objectivity
rule if the member knowingly
1.130.020.01 Drafting
Convention
a - c - Do not seem like safeguards as the first
paragraph indicate'
1.130.020.01 Drafting
Convention
a. Change reference to generic reference and add
reference to QC standards (which cover more than
just audits).
1.130.020.01 Editorial
Suggestion
I think the last paragraph should be labeled d.
1.130.020.01 Editorial
Suggestion
Consistent with the comment above about the
categories of threats, the safeguards identified in the
conceptual framework seem to align better with
independence than in this context. If the conceptual
framework is intended to be used throughout the
entire Code of Conduct, threats and safeguards that
are context-specific may need to be developed in
order for members to apply the framework
consistently. This seems to be the only
interpretation that is analyzed in this document that
attempts to apply the threats and safeguards
approach. Why is that, as only having it in one place
might be confusing as to which safeguards apply - if
no specific safeguards are identified in other
interpretations, and the general safeguards are more
independence-oriented, then are members to
conclude there no safeguards attached to these other
interpretations?
1.130.020.01 Editorial
Suggestion
Step 4 of the extant (Interpretation 102-4) requires
that "The member should at all times be cognizant of
his or her obligations under interpretation 102-3 [ET
section 102.04]." Interpretation 102-3 addresses
"Obligations of a member to his or her employer's
external accountant" and, accordingly, its omission
from the proposed interpretation, which applies to
members in public practice, is appropriate.
1.130.020.01 Editorial
Suggestion
The major difference between the proposed
interpretation and the extant (interpretation 102-4) is
the characterization of certain "steps" in the extant as
"safeguards" in the proposed; however, referring to
these matters as "steps" seems clearer than (and
therefore preferable to) referring to them as
"safeguards." Furthermore, the meaning of the
reference in par. 01 to "self-interest, familiarity and
undue influence threats" is not clear.
1.130.020.01 Other Should this be broadened to include a member not
subordinating his/her judgment to the client? This
would make sense and can be easily incorporated
(e.g. When a member and his or her supervisor or
client have a disagreement...
1.130.020.01 a Editorial
Suggestion
The member should refer to the consider guidance in
AU
1.130.020.01a Cross
References
A comment is hung on the phrase "what the auditor
should do" that says "Interpretation 1.130.010.01
suggests that a member is preparing, or assisting in
the preparation of a financial statement. This
language introduces the notion of the member also
being the auditor. That being the case, shouldn't there
be a cross reference somewhere to Subtopic 1.295
(i.e., Interpretation 101-3)?"
1.140.010.01 Editorial
Suggestion
Do not have link to Integrity and Objectivity rule
1.140.010.01 Editorial
Suggestion
Suggest that "tax and consulting" be replaced by
"nonattest".
1.140.010.02 Drafting
Convention
The paragraphs throughout the draft that include
references to the Code of Professional Conduct are a
bit circular and it is not clear what value they add.
1.140.010.02 Editorial
Suggestion
Suggest the phrase "Code of Professional Conduct" be
replaced by the defined phrase "AICPA Code."
1.200.000 Other The independence interpretations are not logically
consistent with the conceptual framework for
evaluating independence. The independence
interpretations are essentially political "rules"
whereas the logical and consistent application of the
conceptual framework in some cases would lead to an
interpretation different from an "official" AICPA
independence interpretation. This is the same
problem as the "legal standards" issue vs. the
"professional standards." In effect, this section says
to act rationally (apply the conceptual framework)
unless there is an AICPA interpretation covering the
situation, and if so just follow the rule regardless of its
applicability to the particular situation between the
firm and the client. I would reverse the priority of the
conceptual framework and interpretations and note
that AICPA interpretations provide guidance in certain
situations unless a better, more rational result is
obtained by using the conceptual framework. I
respect a rational, objectively supported explanation
for a particular situation (i.e., "professional
judgment") more than the fact that at some time in
the past a majority of committee members voted in
favor of a particular rule.
1.200.001 Editorial
Suggestion
Suggest that instead of saying "standards
promulgated by bodies" that we cite those standards.
1.200.005.02 Editorial
Suggestion"in violation of the Independence Rule Vs.
"independence would be impaired" elsewhere in
Topic 200. This is not consistent with the
standard language, although it is much clearer
(the more commonly used verbiage in the
codified Code sounds, unfortunately, too much
like techno-speak that is not helpful to the
uninitiated). In any case, whatever standard
language is ultimately landed upon, it should be
used consistently throughout the Code,
especially in Topic 200. Currently, we find there
to be a lack of consistency in the verbiage that
the Code uses to express the notion that
independence is impaired (or, conversely, that it
is not impaired).
1.200.005.02 Editorial
Suggestion
Is "significant threat" a defined term? Should it be?
What does it mean vs. a threat at an acceptable level?
It is not a term used in the Conceptual Framework of
the current Code. Perhaps the codified Code should
use the standard "acceptable level" language to
discuss threats - i.e., a threat that is not at an
acceptable level.
1.210.010 Other Agree with placement for definitions, terms for conceptual framework application for independence
1.210.010.01 Drafting
Convention
The last sentence is confusing as it appears to
reference to itself. Maybe it just needs to be
reworded.
1.210.010.01 Editorial
Suggestion
"When making that evaluation, a member should
apply this interpretation that describes a the threats
and safeguards approach as outlined in this
interpretation to analyzing independence matters."
1.210.010.01 Editorial
Suggestion
Add prior reference: "Other Considerations" section
of paragraph .02 of ET section 101
1.210.010.01 Editorial
Suggestion
delete the words, "In addition" and just start the
sentence with "A". Changed the last word from
"developed" to "based".
1.210.010.02 Editorial
Suggestion
In certain circumstances,There are circumstances in
which the AICPA Code specifies that no safeguards
can reduce an independence threat to an acceptable
level, and as such, this interpretation should may not
be used to overcome a prohibition or requirement
specifically contained in an independence
interpretation. For example, a covered member may
not own even an immaterial direct financial interest in
an attest client because there is no safeguard to
reduce the self-interest threat to an acceptable level.
1.210.010.02 Editorial
Suggestion
add to the last sentence of the paragraph "under the
applicable interpretation".
1.210.010.02 Drafting
Convention
1st sentence - remove reference to the AICPA Code.
1.210.010.04 Editorial
Suggestion
For purposes of clarity, it might be helpful to the
reader to state "the obvious" here; that is, that the
member cannot therefore perform an attest service
(i.e., audit, review, attestation).
1.210.010.05 Drafting
Convention
Threats - Can we move the last 2 sentences to the end
of 1.210.010.05? "Threats might not involve violations
of existing interpretations or rulings. For example, the
circumstance described in paragraph .15(b) of this
framework is permissible in limited instances under
current independence interpretations."
1.210.010.05 Editorial
Suggestion
"and the effectiveness of those safeguards as
described in paragraph .20". - Note Paragraph .20
does not describe the safeguards, it describes
determining the effectiveness of them.
1.210.010.05 Editorial
Suggestion
Suggest changing the wording to "of the safeguards
applied (as described in paragraph .20 of this
interpretation)
1.210.010.05 Editorial
Suggestion
The use of these terms (acceptable level, impair &
threats) is not limited to the Conceptual Framework,
but appear throughout the Code. Therefore, because
of the broader applicability, they should be included
in 0.400 (Definitions).
1.210.010.05 Other Threats- I believe this paragraph needs to be
simplified, especially since it involves general
concepts. Also, because of the extensive content of
the document, I don't think it is advisable to refer to
other paragraphs for additional understanding of the
content. It is frustrating to the reader/user. "Threats
might not involve violations of existing interpretations
or rulings" is confusing. Are you trying to say, "not all
threats result in a impairment to independence"?
1.210.010.08 Editorial
Suggestion
I think you should prior reference: "Other
Considerations" section of paragraph .02 of ET
section 101
1.210.010.08 Editorial
Suggestion
should read …considered a violation of the
Compliance with Standards rule (ET reference) not the
Independence rule (no ET reference needed)
1.210.010.08 Editorial
Suggestion
Suggest changing the wording to ".08 When the
member applies safeguards to eliminates or reduces
significant threats to an acceptable level through the
application of safeguards, as described in paragraph
.06(c) of the Conceptual Framework for Members in
the Practice of Public Accounting, the member should
document the identified threats and the safeguards
that are applied. A fFailure to prepare the required
documentation would be considered a violation of the
Compliance With Standards rule (AICPA, Professional
Standards, ET 1.310.001), not the Independence rule
(AICPA, Professional Standards, ET 1.200.001),
provided that the member can demonstrate that
safeguards were applied that eliminated or reduced
significant threats to an acceptable level.
1.210.010.08 editorial
suggestion
Perhaps add: "not a threat to independence" to
emphasize that failure to document does not result in
a violation of the independene standard.
1.210.010.08 Structure of
Code
The reference to .06c of the Conceptual Framework
for Members in the Practice of Public Accounting is
confusing as there is separate guidance for threats
and safeguards in the independence sections
(1.210.010.09-.21). Having the threats and safeguards
for members in public accounting is confusing.
1.210.010.10 Editorial
Suggestion
Do not have link to Conceptual Framework for
Independence interpretation
1.210.010.12 Editorial
Suggestion
Add ":" after For example
1.210.010.12 c Editorial
Suggestion
Suggest adding the word "other" before public forum
and delete the a
1.210.010.13 Editorial
Suggestion
Add ":" after For example
1.210.010.16 Editorial
Suggestion
Comment related to the phrase "nonattest services
performed, or services previously performed or
supervised by the member" - How are "nonattest
service performed" and "service previously
performed…by the member" different? What
different services are these two clauses intended to
address?
1.210.010.16 editorial
suggestion
Suggest adding words "objectively" after? Not",and
before "evaluate "instead of appropriately.
1.210.010.16 Other Self-review threat - member's immediate family or
close relative? I think that this belongs under
familiarity.
1.210.010.18 ediorial
comment
suggest removing " counteract" replace with
"ameliorate" or "diminish", or "neutralize"
1.210.010.20 Editorial
Suggestion No punctuation in these bullets, and in many
similar paragraphs throughout the Code. Others,
however, like paragraph .19 above, include
punctuation. Appropriate punctuation should be
added here and throughout the Code.
1.210.010.21 Editorial
Suggestion
If the safeguards identified apply with respect to
independence, then what safeguards are applicable
for threats to compliance with the non-independence
rules of the Code? For example, what safeguards are
there for threats to compliance with the guidance in
Topic 1.300? As noted before, it will only confuse
matters for the Code to comingle the discussion of
ethics and independence threats. Given the existence
of this Conceptual Framework devoted exclusively to
independence matters, shouldn't the broad
framework focus on the threats to compliance with
the other ethics rules of the Code and the appropriate
safeguards to apply?
1.210.010.21 Editorial
Suggestion
Related to the Prior Reference ET Section 100-1: The
remainder of the discussion from paragraph 20 of the
Conceptual Framework in the current Code around
safeguards implemented by the attest client and the
firm has been omitted here.
1.220.010.01 Editorial
Suggestion
change the ";" to a "."
1.220.010.03 Drafting
Convention
Sentence wording is off - "Members of the association
should consistently apply.." This doesn't mean the
same thing as the "members of the association should
apply the interpretation in the same manner." They
could be consistently different.
1.220.010.04 Editorial
Suggestion
may be created by another network firm's interests in
and relationships with the attest client.
1.220.010.04 Editorial
Suggestion
related to the start of the 2nd sentence: Odd
transition from what a network firm has to do in the
first sentence to what a covered member has to do in
the second sentence. Why the difference? All of a
sudden, the guidance moves from requirements of
the network firm to requirements of the covered
member.
1.220.010.07 Editorial
Suggestion
Add , after the word members (occurs twice)
1.220.010.10 a Editorial
Suggestion
Same comment as above. No appropriate punctuation
in these bullets.
1.220.010.14 a Editorial
Suggestion
Same comment as above. No appropriate punctuation
in these bullets.
1.220.020 Other This interpretation/subtopic is complex and difficult
to follow and might benefit from a "Plain English"
revision as a long term project.
1.220.020.02 Editorial
Suggestion
All such structures must be organized in a form that
complies with applicable laws, regulations, and the
Form of Organization and Name rule
1.220.020.04 Editorial
Suggestion
The following terms are defined subsequently solely
for the purpose of applyinguse with this
interpretation
1.220.020.04 a Editorial
Suggestion
Related to the term "professional services": Is this
the correct term here? Is this intended to mean
nonattest services?
1.220.020.05 Editorial
Suggestion
Related to the word "subsequently" - Can the specific
citation be provided?
1.220.020.05 Editorial
Suggestion
I think the word related is missing…in this
interpretation are related to the example, ….
1.220.020.06 Editorial
Suggestion
I think that the defining of (the professional services
subsidiary [PSS] should be moved to after subsidiaries
or divisions earlier in the sentences. It is too
confusing after the examples of nonattest
professional services
1.220.020.06 Editorial
Suggestion
Move the word "to clients" after nonattest
professional services instead of before it. Also related
to "professional services" - Is this term
necessary/correct here?
1.220.020.09 Editorial
Suggestion
Here and throughout Topic 200: This language is
cumbersome, too wordy, and redundant.
Independence is impaired because, by definition,
threats are not at an acceptable level. Does this need
to be so wordy? Also, as noted before, it sounds too
much like techno-speak that is not helpful to the
uninitiated reader.
1.220.020.10 Editorial
Suggestion
In addition, independence would be impaired because
threats cannot be eliminatedare not at an acceptable
level and could not be or reduced to an acceptable
level
1.220.020.10 editorial
suggestion
is there a definition for "materiality"?
1.220.020.10 a Editorial
Suggestion
Suggest that 1st sentence is long, run-on sentence.
Also question whether the phase "comtemplated by"
should be prohibited by
1.220.020.12 Editorial
Suggestion
Independence would be impaired because threats
are not at an acceptable level and could not be
reduced to an acceptable level by the application of
safeguards when Newfirm and its partners and
professional employees may not perform attest
engagements for PublicCo or any of its subsidiaries or
divisions.
1.220.020.12 Editorial
Suggestion
Related to PwC's rewrite in 1.220.020.12 - Isn't this
the new standard language being used to denote an
outright prohibition? Again, there should be
consistency throughout the Code.
1.220.020.12 Editorial
Suggestion
Related to the phase "would be considered to be
impaired" - Hasn't the Code moved away from this
language (although it is much clearer and direct than
the standard language being proposed to replace it)?
1.220.030.01 Editorial
Suggestion
Related to the phase "would be impaired" - Hasn't the
Code moved away from this language (although it is
much clearer and direct than the standard language
being proposed to replace it)?
1.224.010.02 Editorial
Suggestion
Add the words "with respect" after the word
applicable
1.224.010.02a Editorial
Suggestion
Add the word "covered" before member's
independence
1.224.010.02a Editorial
Suggestion
Do not have link to Conceptual Framework for
Independence interpretation
1.224.010.02c Editorial
Suggestion
Extend the hyperlink to include the word
"interpretation"
1.224.010.02c Editorial
Suggestion
under (c)-(j) of the definition of affiliate, would put
the employeeis in a key position
1.224.010.02d Editorial
Suggestion
A covered member’s immediate family members and
close relatives may be employed in a key position at
an entity described under (c)–(j) of the definition of
affiliate if provided they are not in a key position with
respect to the financial statement attest client.
1.224.010.04 Editorial
Suggestion
Comment related to the phrase "apply to
engagements performed for a financial statement
attest client" - The more precise wording would be to
refer to "engagements," as the Code is not binding on
the client itself.
1.224.020 Editorial
Suggestion
Add to the title "Entities Included in"
1.224.020 Name of
Section
It seems like the title here ought to refer to
independence matters when we are performing attest
engagements for state and local government entities
in that the financial statements themselves would not
be the issue in the Code.
1.224.020.06 Editorial
Suggestion
Change reference from Paragraph .04 to Paragraph
.05
1.224.020.06 a Editorial
SuggestionAgain, no punctuation in these bullets.
1.224.020.06 b Editorial
Suggestion
Entities that should be disclosed or actually are
disclosed in the financial statement notes? How
would the covered member know what entities
should be disclosed, but aren't?
1.224.020.07 Editorial
Suggestion
Delete , and add .
1.224.020.07 Editorial
Suggestion
When a covered member isdoes not auditing the
primary government but is auditsing the financial
statements of the following entities, the covered
member is not required to be independent of
entities that the covered member does not audit:
1.224.020.07 a Editorial
Suggestion
Add ";" between entity and or
1.226.000 Editorial
Suggestion
We're not sure how this title relates to the content of
the subtopic. Is there a need for this title? It makes
this very difficult guidance to locate because the
interpretation/subtopic does not truly address the
concept of "engagement period," in its purest form,
but rather "post-engagement" period and residual
auditor responsibilities. Simply use the title of
1.226.010, as with 1.150.
1.226.000 Question 1 TIC suggests changing the title “Engagement Period”
(Page 68 of Draft Codification) to “Reissued Reports.”
TIC believes “Reissued Reports” is more descriptive of
the section content and would be more intuitive for
members. When questions arise concerning
previously issued reports, TIC members would not
readily or intuitively think to look for guidance under
a section entitled “engagement period.”
1.226.010 Editorial
Suggestion
Resigning or Consenting to the Use of athe Previously
Issued Report
1.226.010.01 Editorial
Suggestion
Related to phrase "was in compliance with the
Independence rule" - Vs. "was independent." It is
difficult to see how this wording improves on clarity,
understanding, etc, particularly with regard to other
rule sets (e.g., SEC), and how this will be read by the
uninitiated reader.
1.226.010.02 Editorial
Suggestion
the member or member's firm may perform
procedures required by applicable professional
standards when the member's or member's firm's
independence is impaired., sSuch procedures include
as making inquiries of successor auditors, reading the
subsequent financial statements, or other procedures
that the member believes are necessary, to assess the
effect of subsequently discovered facts on the
financial statements covered by the previously issued
report when the member's or member's firm's
independence is impaired.
1.228.000 Editorial
Suggestion
Change title from "Engagement Contractual Terms" to
"Indemnification and ADR Arrangements
1.228.020.01 Editorial
Suggestion
Need to add to the prior reference at the end 191
1.228.030.02 Editorial
Suggestion
Add the word "a" before provision
1.230.010.02 Editorial
Suggestion
Related to "compliance with the Independence rule
would not be at an acceptable level and could not be
reduced by the application of safeguards - In some
places, this language is inserted before the statement
that independence would be impaired, in other places
it isn't - e.g., APS interpretation.
1.230.020.01 Editorial
Suggestion
Do not need the ET reference since it was included in
1.230.010.04
1.230.020.01 Editorial
Suggestion
Recommend deleting the word "and" before
commissions
1.230.020.01 Editorial
Suggestion
Might readers incorrectly conclude from this
heading/placement that Topic 1.500 has
independence implications? Also, how does the Code
address the requirements in IESBA 290.226?
1.230.020.01 Editorial
Suggestion
Is it necessary to say this twice…here and in
paragraph .04? - refer to 1.230.010.04
1.240.010 Editorial
Suggestion
I think we should also prior reference paragraph .17
of ET section 101
1.240.010 Editorial
Suggestion
Overview of Direct and Indirect Financial Interests
1.240.010.01 Editorial
Suggestion
General comment - The current Code says in relatively
few words what members can and cannot do; a very
user-friendly approach. Contrasting that with the
approach used in the codified Code (here and in other
topics and subtopics, but especially in Topic 1.200),
it's difficult to conclude that the new approach better
serves the end user.
1.240.010.01;
1.240.010.02;
1.240.010.03;
1.245.010.01 etc.
Cross
References
The capitilization of the cross reference
"Independence rule" is inconsistent with the subtopic
"Independence Rule". Recommend the indpendence
rule cross reference be revised to read
"Independence Rule".
1.240.030.04 Numeric
Citations
The seperation of examples into a separate subtopic
is inconsistent between 1.240.040.03/04 and
1.240.030.03. Recommend subtopic 1.240.040.03 be
combined with the examples listed in subtopic
1.240.040.04.
1.240.040.03 Editorial
Suggestion
Many complex, paragraph length sentences here.
1.240.040.03 Editorial
Suggestion
A colon is ommitted after the clause "For example"
which introduces a list of examples. Recommend
inserting a colon after the clause "For example".
1.240.040.03 Editorial
Suggestion
Recommend adding a ":" after For Example
1.240.040.05 Editorial
Suggestion
change "indirect finanical interests" to "an indirect
financial interest"
1.240.040.07 Editorial
Suggestion
The capitilization of the cross reference "Plan is an
Attest Client or Is Sponsored by an Attest Client" is
inconsistent with the subtopic "Plan Is an Attest Client
or Is Sponsored by an Attest Client". Recommend
revising the word "is" with a capital "I" in "Plan is an
Attest Client or Is Sponsored by an Attest Client".
1.240.040.07 Editorial
Suggestion
See the Plan is an Attest Client or Is Sponsored by an
Attest Client interpretation, and the Former
Employment or Association With an Attest Client
interpretation, and the Family Relationships With
Attest Clients interpretation of the Independence
rule (AICPA, Professional Standards, ET 1.250.010, and
1.280.100, and 1.275 respectively) and the
interpretations of the Family Relationships With
Attest Clients subtopic under the Independence rule
(AICPA, Professional Standards, ET 1.275). [Prior
reference: paragraph .17 of ET section 101]
1.240.040.07;
1.240.050.05;
1.250.010.01, a iii;
1.250.010.01, b etc.
Cross
References
When referencing a subtopic or interpretation of the
independnece rule, the wording "Independence rule"
appears without a hyperlink. Recommend capitilizing
the "R" in "Independence rule".
1.240.050.05 Editorial
Suggestion
See the Client Affiliates interpretation of the
Independence rule (AICPA, Professional Standards, ET
1.224.010) and the Joint Closely-Held Investments
interpretation of the Independence rule (AICPA,
Professional Standards, ET 1.224.010 and 1.270.020
respectively) for additional guidance on the
application of the Financial Interests interpretation
financial interests with respect (AICPA, Professional
Standards, ET 1.240) to affiliates of a financial
statement attest client. [Prior reference: paragraph
.17 of ET section 101]
1.240.070.05 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.245.010.01 Editorial
Suggestion
suggests italicizing the word designation
1.245.010.02 Editorial
Suggestion
Suggests changing "however, if" to "however, when",
italicizing the word serves and adding a : "safeguards
if"
1.245.010.02 a Editorial
Suggestion
A semicolon is ommitted after point a and after point
b but before the word "or." Recommend inserting
semicolons after points a and b.
1.245.020.01 Editorial
Suggestion
suggests changing "definition" to "interpretation"
1.245.020.02 Other The opening sentence does not appear to be accurate
- "including a blind trust" seems to conflict with
paragraph .04.
1.245.020.04 Numeric
Citations
The seperation of examples into a separate subtopic
is inconsistent between 1.245.020.03/04 and
1.240.030.03. Recommend subtopic 1.245.020.03 be
combined with the examples listed in subtopic
1.245.020.04.
1.250.010.01 Editorial
Suggestion
In regard to the phrase "independence with respect
to the employee benefit plan and the sponsor would
be impaired" comments the following - Vs.
"compliance with the Independence rule" language
1.250.010.01 Editorial
Suggestion
suggests changing "will" to "would"
1.250.010.01 a iv Editorial
Suggestion
I think prior reference should be moved to end of
section since all topics are covered by ethics ruling
1.250.010.01 b Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.250.010.01 b Editorial
Suggestion
suggests adding the following after "interpretation" -
of the Independence rule (AICPA, Professional
Standards, ET 1.280.100)
1.250.020 Editorial
Suggestion
suggests changing "participate" to "participation"
1.250.020.01 Editorial
Suggestion
Extend the hyperlink to include the word
"interpretation"
1.250.020.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.250.020.01 Editorial
Suggestion
to reduce the familiarity, self-interest, or
management participation threats to an acceptable
level, the requirements of paragraph .02(a) - (c) of the
Subsequent Employment or Association With an
Attest Client interpretation of the Independence rule
(AICPA, Professional Standards, ET 1.280.210) must
be met in order to reduce the familiarity, self-
interest, or management participation threats to an
acceptable level,
1.255.010.02 Editorial
Suggestion
suggests changing "concluded" to "concludes" and
changing "was" to "is"
1.255.010.03 a Editorial
Suggestion
A comma seperates point a from point b. Recommend
replacing a comma with a semicolon after point a and
after point b but before the word "or."
1.255.010.04 Editorial
Suggestion
Ellen added a cross reference to 1.260.020.06 based
upon feedback in 1.260.020.06 that it was missing.
1.255.020.01 Editorial
Suggestion
The reference to "ET" is ommitted prior to 1.255.010.
Recommend the AICPA Professional satndards
reference be revised to read "(AICPA, Professional
Standards, ET 1.255.010)"
1.255.020.02 Editorial
Suggestion
suggests adding a ":" to the end of the sentence
1.257.010.02 Editorial
Suggestion
related to "if the policy provided the covered member
with an investment option" - Why raise this point
here given the section title (Policies with No
Investment Option)? We would suggest deleting this
paragraph
1.257.020 Editorial
Suggestion
We're not sure that separating the guidance (.010 vs.
.020) works here. The normal terms, procedures and
requirements guidance (1.257.010.01 above) is
omitted from this section, but would still apply.
1.257.020.01 Other Seems to conflict with the extant - which does not
conclude that these are direct financial interests.
1.257.020.03 Editorial
Suggestion
I think we should add the words after subtopic link "of
the Independence rule"
1.257.020.03 Editorial
Suggestion
See the Financial Interests subtopicinterpretation of
the Independence rule (AICPA, Professional
Standards, ET 1.240) to determine whether other
investments underlying the policy's underlying
investments products are direct financial interests or
indirect financial interests
1.257.020.04 Editorial
Suggestion
related to "joint closely-held investments
interpretation" - Why is this in the insurance
interpretation?
1.257.020.04 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.257.020.04 Editorial
Suggestion
See the Joint Closely-Held Investments interpretation
of the Independence rule (AICPA, Professional
Standards, ET 1.270.020) for additional guidance on
joint closely-held investments
1.257.030.01 Editorial
Suggestion
related to "refer to" - Vs. apply the guidance in?
1.260.010 Editorial
Suggestion
suggests deleting "Overview of"
1.260.010.01 Editorial
Suggestion
related to "in the Loans and Leases With Financial
Institutions or Credit Unions interpretation of the
Independence rule (AICPA, Professional Standards, ET
1.260.020) were met. [Prior reference: paragraph
.02(A)(4) of ET section 101]" - We suggest deleting
this language and simply following with paragraph .02
below. See next comment.
1.260.010.01 Editorial
Suggestion
related to "loan with an attest client" - With vs. "to or
from"?
1.260.010.01 Editorial
Suggestion
related to "were met" - Why use the past tense?
Replace with "are" or "have been"?
1.260.010.01 Editorial
Suggestion
I think 1.260.010.01 & 1.260.020.01 say the same
thing and I don't see why we need both paragraphs
one right after the other
1.260.020.01 Drafting
Convention
1st sentence change "with an attest client" to "to or
from an attest client" ?
1.260.020.01 Editorial
Suggestion
It seems odd to repeat the content in this paragraph
when the same thing is said in 1.260.010.01. We
suggest merging the two interpretations, deleting the
last part of the last sentence in 1.260.010.01 alogn
with 1.260.020.01 and following 1.260.010.01 with
1.260.020.02 (Whew! What a numbering system!?!?)
without creating a new subtopic.
1.260.020.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.260.020.01 Other The last sentence in this paragrah indicates that
independence would be impaired unless the
exceptions provided for in this interpreation are met.
However, the paragraphs that follow don't use the
term "excpetions" so it's not clear which paragraphs
should be consisered the exceptions.
1.260.020.02 Cross
reference
related to "material to the covered member’s net
worth" - Include a cross-reference to how materiality
to net worth ought to be measured?
1.260.020.02 Editorial
Suggestion
Concerned that without saying "provided that all of
the following safeguards are met:" or including the
term "and" after a, b and c that members might not
realize that they have to apply all of the safeguards.
1.260.020.02 Editorial
Suggestion
I think d. should go before b.
1.260.020.02 Editorial
Suggestion
related to "safeguards are met" - Should it be
"applied" instead of "met"? Do you "meet" a
safeguard or "apply" it?
1.260.020.02 Editorial
Suggestion
comment relates to above 1.260.020.03 - A
subheading to separate the lengthy narrative would
be helpful here. Similar comment below.
1.260.020.02 Editorial
Suggestion
related to "would be at an acceptable level, and
independence would not be impaired" - General
comment - As noted before, this language is
redundant. If threats are at an acceptable level, then
automatically independence is not impaired.
1.260.020.02 Editorial
Suggestion
suggest deleting "that is, immaterial unsecured loan"
1.260.020.02 Editorial
Suggestion
This subtopic is repetative. Recommend removing
"(that is, immaterial unsecured loan)".
An additional reccomendation is replacing the
semicolons within the subtopic with commas.
1.260.020.02 b Editorial
Suggestion
The word "or" is repetative in the last sentence.
Recommend revising it to end with "revised collateral,
and revised or waived covenants."
1.260.020.03 a Editorial
Suggestion
suggests changing "an" to "the"
1.260.020.03 d Editorial
Suggestion
monthly statement, or a payment made by the due
date or within any available grace period
1.260.020.04 Editorial
Suggestion
suggests changing "enters into" to "obtains"
1.260.020.04 Editorial
Suggestion
related to "normal lending procedures, terms, and
requirements, and the covered member complies
with the terms of the lending or lease agreement and
keeps the required payments current at all times" -
This is awkwardly worded. We suggest reverting back
to the original language of Interpretation 101-5.
1.260.020.04 Editorial
Suggestion
related to "When the covered member is a partner in
a partnership, a loan " - The Code shifts gears here a
bit. Again, a subheading would be helpful so that this
guidance doesn't get lost.
1.260.020.04 Editorial
Suggestion
This paragraph seems to need some kind of context.
For example, the extant paragraph includes a
statement that "For purposes of applying the
grandfathered loans provision when the covered
member is a partner I a partnership.."
1.260.020.04 Other This paragraph in the extant seems to relate to
paragraph .02. That relationship has been lost by the
reformatting.
1.260.020.04 a Editorial
Suggestion
A comma seperates point a from point b. Recommend
replacing a comma with a semicolon after point a and
after point b but before the word "or."
1.260.020.05 Editorial
Suggestion
This is true in a number of situations, not just with
respect to loans. The statement could therefore be
misleading. As the Code already addresses this
concern, globally, in 0.200.03, we suggest that this
paragraph be deleted.
1.260.020.06 Editorial
Suggestion
Does the Code cross-reference in both directions?
1.260.020.06 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.260.020.06 Editorial
Suggestion
suggests adding the following after "interpretation" -
of the Independence rule (AICPA, Professional
Standards, ET 1.255.010 and 1.265.040 respectively)
1.260.030.01 Editorial
Suggestion
suggest adding the following after "covered member" -
that was obtained from another lender and also asked
instead of "lender" - To be consistent, shouldn't this
say "financial institution" instead?
1.260.040.01 Editorial
Suggestion
related to "Loans and Leases With Financial
Institutions and Credit Unions interpretation," - The
citation should be provided so that readers can
quickly locate the guidance. This should be done
throughout the Code, in all such instances.
1.260.040.01 Editorial
Suggestion
related to word "met" - Vs. applied?
1.260.040.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.260.040.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.260.040.02 Editorial
Suggestion
suggests adding the following after "interpretation" -
of the Independence rule (AICPA, Professional
Standards, ET 1.260.020),
1.260.040.02 Editorial
Suggestion
suggests changing "had a lease" to "has a lease"
1.260.040.02 Editorial
Suggestion
This is such a lengthy, run-on sentence.
1.260.050 Editorial
Suggestion
Will this subtopic be deleted when Interpretation 101-
18 becomes effective? Should the Code note that
fact?
1.260.050.01 Editorial
Suggestion
related to "Threats would not be at an acceptable
level and could not be reduced by the application of
safeguards, and independence would be impaired" -
Again, this is cumbersome and awkward wording. Isn't
there a simpler way of saying this, here and
throughout Topic 1.200?
1.260.050.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.260.050.01 Editorial
Suggestion
suggest adding between "unless" and "permitted" -
"the lending relationship is"?
1.260.050.01 Editorial
Suggestion
suggests adding after "interpretation" - of the
Independence rule (AICPA, Professional Standards,
ET 1.260.020)
1.260.050.01 Editorial
Suggestion
related to "a shareholder of an entity" - 10%
significant? We wouldn't say that a self-interest threat
exists where a covered member holds a de minimus
number of shares, correct? A threat may exist?
Wouldn't the threat only exist if the covered member
has control over the entity with the loan?
1.260.050.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.260.050.02 Editorial
Suggestion
suggests adding after "interpretation" - of the
Integrity and Objectivity rule AICPA, Professional
Standards, ET 1.110.010)
1.260.050.02 Editorial
Suggestion
suggests changing "loan from an attest client" to
"loan with an attest client"
1.260.050.02 Editorial
Suggestion
Is this guidance better placed within the Conflicts of
Interest topic? It's not an independence concern.
1.260.050.02 Editorial
Suggestion
suggests adding after "firm" - ", who is not otherwise
a covered member,"
1.260.050.03 Cross
References
The capitilization of the cross reference "Confidential
Client Information rule" is inconsistent with the
subtopic "Confidential Client Information Rule".
Recommend the indpendence rule cross reference be
revised to read "Confidential Client Information Rule".
1.260.050.03 Editorial
Suggestion
Is this the correct placement?
1.265.010.01 Editorial
Suggestion
an attest client social club (for example, a country
club, tennis club, and so on) that is an attest client,
and
1.265.010.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.265.010.02 Editorial
Suggestion
suggests adding after "not be reduced" - to an
acceptable level
1.265.010.02 Editorial
Suggestion
suggests adding after "interpretation" - of the
Independence rule (AICPA, Professional Standards,ET
1.280.005) - Provide the relevant Code citation, here
and throughout.
1.265.020.01 Editorial
Suggestion
an attest client trade association that is an attest
client,
1.265.020.01 Editorial
Suggestion
This seems incomplete. "Acceptable level" guidance
should be provided in a manner similar to
1.265.010.01 above.
1.265.020.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.265.020.02 Editorial
Suggestion
suggests adding after "not be reduced" - to an
acceptable level - Add this language here and
throughout (where applicable) for consistency, since
the goal is to use standard language consistently.
There are other areas in Topic 200 where the wording
used is "…could not be reduced to an acceptable
level…" - see, for example, 1.220.020.09.
1.265.020.02 Editorial
Suggestion
suggests adding after "interpretation" - of the
Independence rule (AICPA, Professional Standards,ET
1.280.005) - Provide the relevant Code citation, here
and throughout.
1.265.030.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.265.030.03 Editorial
Suggestion
This is the third time Subtopic 265 says this. This
subtopic should just say it once, or preferably,
consider whether it needs to say this at all, given that
the employment prohibition relates to all attest
clients, not just membership organizations.
1.265.030.04 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.265.030.04 Editorial
Suggestion
We recommend that Conflict of Interest matters be
confined to 1.110, not interspersed throughout the
independence topic. It can be a source of confusion -
e.g., a perceived conflict with respect to an attest
client addressed by disclosure/consent, rather than
the Independence Conceptual Framework.
1.265.040.01 Editorial
Suggestion
IfWhen a covered member is a member of an attest
client credit union that is an attest client,
1.265.040.02 Editorial
Suggestion
suggests adding after "not be reduced" - to an
acceptable level
1.265.040.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.265.040.03 Editorial
Suggestion
related to "Partners and professional employees" -
Covered members are subject to additional
restrictions.
1.270.010 Editorial
Suggestion
suggests deleting "With Attest Clients"
1.270.010.01 Editorial
Suggestion
suggests adding after "not be reduced" - to an
acceptable level
1.270.010.01 Editorial
Suggestion
Related to "familiarity" - This is a new threat not
identified in the IESBA Code with respect to business
relationships. The IESBA Code only speaks to self-
interest and intimidation threats.
1.270.010.01 Editorial
Suggestion
Related to "If a member of his or her firm has a
cooperative arrangement" - Shouldn't this subtopic
begin by first defining what is meant by a cooperative
arrangement?
1.270.010.02 Editorial
Suggestion
Are these really safeguards, or attributes which
indicate that a cooperative arrangement does not
exist? The existing language is much more clear.
1.270.010.02 Editorial
Suggestion
Shouldn't this subtopic talk about what a cooperative
arrangement is, before saying what it isn't? We
suggest reversing the order of 1.275.010.02 and
1.275.010.03.
1.270.010.02 a Editorial
Suggestion
Separate agreements, correct? As in current
Interpretation 101-12?
1.270.010.02 a Editorial
Suggestion
related to "rights or obligations between them" -
Rights and obligations between whom? The firm and
the attest client? This language does not appear in the
original interpretation in the current Code, and
appears to conflict with 1.275.010.02(b).
1.270.010.02 a Editorial
Suggestion
suggests adding "that do not create rights" - Shouldn't
this guidance say
agreements/arrangements/understandings that do
not create rights or obligations between the member
and the attest client? As written, this would be a
significant change that is the reverse of the position in
the current Code. See proposed change. Or,
alternatively, delete the reference to "that create
rights or obligations between them".
1.270.010.02 a Substantive
Change -
Attest Client
I recommend the following language which retains
the original meaning of the Interpretation .02 a.
The participation of the firm and attest client are
governed by separate agreements, arrangements, or
understandings that do not create any rights or
obligations between the firm and the attest client.
1.270.010.02 b Editorial
Suggestion
for the other's activities or results of the other party
1.270.010.02 c Editorial
Suggestion
other's representative or agent of the other party.
1.270.010.03 c Editorial
Suggestion
of the firm's services or products of the firm with one
or more of the attest client's services or products of
the attest client and market the package with
references to both parties
1.270.010.03 d Editorial
Suggestion
Distribution or marketing aArrangements under which
the firm acts as a distributor or marketer of the attest
client's products or services, or the attest client acts
as the distributor or marketer of the firm's products
or services of the firm
1.270.010.04 Editorial
Suggestion
Why the addition? These fee arrangements are not
unique to cooperatives, nor is this the only significant
issue -e.g., providing prohibited nonattest services
through a cooperative arrangement to another attest
client also raises independence concerns.
1.270.020 Structure of
Code
Joint Closely-Held Investments - Move to section on
Financial Interests?
1.270.020.01 Editorial
Suggestion
related to "compliance with the Independence rule" -
Similar guidance in prior interpretations, for instance,
1.270.010, does not contain this language. Whatever
standard language has been chosen, the Code should
use it throughout.
1.270.020.01 Editorial
Suggestion
suggests adding after "not be reduced" - to an
acceptable level
1.270.020.01 Editorial
Suggestion
, and independence would be impaired, if the covered
member held a material joint closely-held
investment is material to the covered member and
held during the period of the professional
engagement. Accordingly, independence would be
impaired.
1.270.020.01 Editorial
Suggestion
related to "joint closely-held investment" - There is no
need to define this term in 0.400 (Definitions) as this
is the only occurrence of the term. Therefore, define
it in this subtopic/interpretation.
1.275.000 Editorial
Suggestion
suggests deleting "With Attest Clients"
1.275.010.01 Editorial
Suggestion
related to "except to the extent permitted" - This
language is imprecise. It is the covered member that
is subject to independence requirements, not the
immediate family member. Perhaps reword as "the
covered member must be satisfied…"?
1.275.010.01 b Editorial
Suggestion
Need to reference at end (AICPA, Professional
Standards, 1.275.030)
1.275.010.01 b Editorial
Suggestion
Provide relevant Code citation.
1.275.010.01 d Editorial
Suggestion
Vs. "Immediate Family Member"?
1.275.010.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.010.02 Editorial
Suggestion
related to "the immediate family of a covered
member may not own more than 5 percent of an
attest client’s outstanding" - This guidance is
misleading/incorrect. It needs to be re-worded. The
prohibition in 1.240.010.03 relates to collective
ownership not exceeding 5%. Therefore, a violation
may occur even if the immediate family member
owns less than 5%.
1.275.010.02 Editorial
Suggestion
related to "Financial Interests interpretation" -
Provide citation, here and throughout.
1.275.010.03 Editorial
Suggestion
interests of the immediate family member's and the
covered member's interests should
1.275.010.03 Editorial
Suggestion
Is this the best placement, as this guidance has
broader relevance?
1.275.020 Editorial
Suggestion
Immediate Family Member Is Employed byat the
Attest Client - Present this guidance as a subtopic of
1.275.010 to shorten the titles.
1.275.020.01 Editorial
Suggestion
related to "compliance with the Independence rule" -
Same comment as above. The Code should use
standard wording throughout
1.275.020.02 Editorial
Suggestion
In most other sections, when referring to 'an
immediate family member,' the passing begins by
saying so. This passage should be re-written as: "If an
immediate family member of a covered member is
employed by an attest client, but is not in a key
position, threats would be at an acceptable level and
independence would not be impaired."
Written this way, the reader can move or continue
reading whether or not the immediate family
member is in a key position.
1.275.020.02-.03 Editorial
Suggestion
The codified Code uses three times as many words as
does the current Code to say this - "An individual in
a covered member's immediate family may be
employed by an attest client in a position other than a
key position." Which wording is more clear and
user-friendly? This is the case in a number of places in
the Codification. Staff and PEEC should rethink their
approach, and opt for what is best for the reader.
1.275.020.03 Editorial
Suggestion
In most other sections, when referring to 'an
immediate family member,' the passing begins by
saying so. This passage should be re-written as: "If an
immediate family member of a covered member is in
a key position with an attest client, threats would not
be at an acceptable level and could not be reduced by
the application of safeguards. Accordingly,
independence would be impaired."
Written this way, the reader can move or continue
reading whether or not the immediate family
member is in a key position.
1.275.020.04 Editorial
Suggestion
Under these preexisting requirementlationships
1.275.020.04 Editorial
Suggestion
existing attest client that impairs independence under
this interpretation and that
1.275.020.04 Editorial
Suggestion
Should not link close relative to definition in 0.400
since redefine in paragraph .05
1.275.020.04 Editorial
Suggestion
This interpretation deals only with employment, not
association.
1.275.020.04 a Editorial
Suggestion
related to "spouse or a dependent" - Vs. immediate
family member? Here and in 1.275.020.04(a), (b).
1.275.020.04 a i Editorial
Suggestion
suggests adding "attest" before engagement
1.275.020.04 a I 1-3 Editorial
Suggestion
suggests adding "attest" before each instance of
engagement
1.275.020.04 b Editorial
Suggestion
attest engagement has a position with the attest
client involving audit-sensitive activities that is an
audit-sensitive position.
1.275.020.04
paragraph a.
Drafting
Convention
This restructuring is a bit confusing.
1.275.020.04-.05 Editorial
Suggestion
I think it would make more sense to put the
definitions first so switch .04 & .05
1.275.020.04-.05 Editorial
Suggestion
I think it would make more sense to put the
definitions first so switch .04 & .05
1.275.020.05 Editorial
Suggestion
suggests changing the word "relationships" to
"requirements"
1.275.020.05 a ii Editorial
Suggestion
Examples are not all inclusive, as in the original
guidance?
1.275.020.05 b Editorial
Suggestion
related to term "office" - This term was not defined in
the pre-2001 Code.
1.275.020.05 b Editorial
Suggestion
related to term "responsibility for reporting" - Not all
inclusive as in the original guidance?
1.275.020.05 c Editorial
Suggestion
An audit-sensitive activitiesposition is any activity or
job function are those that areis normally an element
of, or subject to, significant internal accounting
controls, such as those encompassed by, but not
limited to, positions as a cashier
1.275.030 Editorial
Suggestion
Immediate Family Member Participation in an
Employee Benefit Plan That Is an Attest Client or Is
Sponsored by an Attest Client, Other Than Certain
Share-Based Arrangements or Nonqualified Deferred
Compensation Plans
1.275.030.01 Editorial
Suggestion
Lengthy, complex, run on sentence. The extensive
cross-references make the flow of reading this
paragraph difficult
1.275.030.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.030.01 Editorial
Suggestion
[discussed in subtopics 1.275.030-.080 below the
Immediate Family Member Participation in an
Employee Benefit Plan With Financial Interests in an
Attest Client interpretation, the Immediate Family
Member Participation in Share-Based Compensation
Arrangements Resulting in Beneficial Financial
Interests in Attest Clients interpretation, and the
Immediate Family Member Participation in Share-
Based Compensation Arrangements Based Upon
Stock Appreciation interpretation]
1.275.030.01 a Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.040 Editorial
Suggestion
suggests deleting "Immediate Family Member
Participation in an" - If the following
subtopics/interpretations were "sub-topics" of
1.275.030, there would be no need to repeat,
continually, "IFM Participation in…." here or in the
table of contents.
1.275.040.01 Drafting
Convention
Formating related to immediate family member not
serving in a key position… not consistent with section
.050, .060, .070, .080, and .100 where it is included
under "a."
1.275.040.01 Editorial
Suggestion
As above (1.275.030.01), it might be more efficient to
simply cite the subtopic/interpretation numbers
1.275.040.01 Editorial
Suggestion
Same comment as above (1.275.030.01). Lengthy,
complex, run on sentence. The extensive cross-
references make the flow of reading this paragraph
difficult.
1.275.040.01 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.050 Editorial
Suggestion
suggests deleting "Immediate Family Member
Participation in an"
1.275.050 (01) Editorial
Suggestion
When first mentioning the ESOP in this section, it
would be best to clearly define what the acronym
ESOP stands for since it is the first mention in this
section. The proposed change is to add in "employee
stock option plan" prior to ESOP and put ESOP in
parentheses. For consistency purposes, this was
already done in most other sections where ESOP's are
mentioned for the first time.
1.275.050.01 a Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.060 Editorial
Suggestion
suggests deleting "Immediate Family Member
Participation in an"
1.275.060.01 a Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.070 Editorial
Suggestion
suggests deleting "Immediate Family Member
Participation in an"
1.275.070 (d) Editorial
Suggestion
To provide consistency with 1.275.060, this passage
should be re-written as:
d. The immediate family member exercises or forfeits
these rights once he or she is vested if the underlying
price of the employer’s shares equals or exceeds the
exercise price for 10 consecutive days (market
period). The exercise or forfeiture should occur as
soon as practicable but no later than 30 days after the
end of the market period.
1.275.070.01 a Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.080 Editorial
Suggestion
suggests deleting "Immediate Family Member
Participation in an"
1.275.080.01 a Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.275.100.02-.03 Editorial
Suggestion
Is there any way to highlight something…I had to read
the current code before realizing .02(b) said or and
.03(b) said and
1.275.100.04 Editorial
Suggestion
an existing attest client that impair independence
under this interpretation and that existed as of
November 2001 will not be deemed to impair
independence, provided that such relationships were
permitted under the preexisting requirements of the
Independence rule and its interpretations. [Prior
reference: paragraph .02 of ET section 101] Under
these preexisting requirementlationships,
1.275.100.04 Editorial
Suggestion
suggests changing "Grandfathered Close Relative
Relationships" to "Grandfathered Employment
Relationships" - See comments in 1.275.020.04/.05
1.275.100.04 a Editorial
Suggestion
Is this correct? This guidance comes from the pre-
2001 rules (Interpretation 101-9), but was not linked
to employment relationships.
1.275.100.05 Editorial
Suggestion
suggests changing "relationships" to "requirements"
1.280.005.01 Editorial
Suggestion
related to "during the period covered by the financial
statements" - Given that "attest," as defined by the
Code, includes non-financial statement assurance
engagements (e.g., SSAE 16), should PEEC consider
expanding references to f/s (here and throughout the
Code) to include other assertions upon which a
member may opine - e.g., during the period covered
by the subject matter of the attest engagement?
Perhaps a "global" statement to that effect can be
included somewhere in the Code? In the definition of
"financial statements" perhaps?
1.280.005.02 Editorial
Suggestion
related to "member's firm" - Necessary? It is not in
the current Code. Employment wouldn't apply,
neither would most of the capacities cited above.
1.280.005.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.280.005.03 Editorial
Suggestion
related to "Former Employment or Association With
an Attest Client interpretation" - Provide Code
citation
1.280.010.01 Editorial
Suggestion
its activities to those of a charitable, religious, or civic
matters, (or those of a similar nature),
1.280.010.01 c Editorial
Suggestion
he or shethe member
1.280.015.03 Substantive
Change - Not
Identified
New content?
1.280.020 Substantive
Change - Not
Identified
Governmental Advisory Unit - now expanded from
audits to attest? Is this substantive? It is ok with me
but should it be highlighted?
1.280.020.01 Editorial
Suggestion
This passage appears to be very long and reads better
as two distinct sentences. It should be re-written as
follows:
.01 A member’s service on a citizens’ advisory
committee that is studying possible changes in the
form of a county government that is an attest client
of the member’s firm would not impair the member’s
or member’s firm’s independence. Also, a member’s
service on an advisory committee appointed to study
the financial status of the state in which the county is
located would not impair the member’s or member’s
firm’s independence with respect to the county.
1.280.025 Editorial
Suggestion
Combine with the guidance in 1.280.020? It is a
similar subject matter.
1.280.025.01 Other Should this indicate that all of the conditions in a - c
should be met (provided that all)?
1.280.030.01 Other In this section I believe we can omit the words
'management participation.' This section is specifically
referring to the threat to the member's compliance
and mentioning the 'management participation' does
not seem necessary.
1.280.030.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.280.035 Editorial
Suggestion
Shouldn't this be part of the guidance in 1.280.015?
Similar subject matter.
1.280.035.02 Drafting
Convention
Wording is off - try this - "If the directorship is other
than honorary, the threat would not be at an
acceptable level and could not be reduced by the
application of safeguards.
1.280.100.02 Editorial
Suggestion
The previous paragraph notwithstanding, this
sentence reads as an incomplete thought. We suggest
these edits, or otherwise combining paragraphs .01
and .02 - When a member becomes a partner or
professional employee ofwith a firm, that provides
attest services to an entity where the member was
formerly employed or otherwise associated,
familiarity, self-interest, self-review, or management
participation threats to the member’s compliance
with the Independence rule may exist.
1.280.100.04 b Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.280.200.01 Editorial
Suggestion
related to term "member" - Don't define for this
purpose
1.280.200.02 b Editorial
Suggestion
This language only addresses attest engagement team
members.
1.280.200.02 c Editorial
Suggestion
related to "an individual" - Some readers may
interpret this too broadly … (as defined above)?
1.280.200.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.280.210.02 c ii Editorial
Suggestion
related to "such as secretarial and telephone services"
- This seems outdated. Perhaps change to
"administrative and technology services"?
1.285.010 (05 - f) Other The prior code includes customers and vendors also. I
was not sure if they were intentionally left out of the
new code.
1.285.010 (05 - g) Other The prior code includes customers, vendors, and the
member's firm or employer also. I was not sure if
they were intentionally left out of the new code.
1.285.010.01 Editorial
Suggestion
The prior code refers to the equities as 'equity
securities.' Perhaps regarding these equities and
equity securities would be appropriate as it was done
this way in the past.
1.285.010.01 Editorial
Suggestion
attest client or and individuals
1.285.010.02 Editorial
Suggestion
suggests changing "a member on the attest
engagement team" to "a member of the attest
engagement team"
1.285.010.02 Editorial
Suggestion
This section refers to gift's and their insignificance to
the recipient however, I believe that it make's sense
to refer to whether or not 'the value' of that gift is
insignificant to the recipient. The passage should be
re-written as follows: If a member’s firm, a member
on the attest engagement team, or an individual in a
position to influence the attest engagement accepts a
gift from an attest client and the value is not clearly
insignificant to the recipient, the threat to the
member’s compliance with the Independence rule
would not be at an acceptable level and could not be
reduced by the application of safeguards.
1.285.010.06 Editorial
Suggestion
All clients, or nonattest clients?
1.290.010.01 Editorial
Suggestion
.01 The relationship between an attest client’s
management and a covered member must be
characterized by complete candor and full disclosure
regarding all aspects of the attest client ’s business
operations. In addition, the covered member must
not be biased, so that the covered member can
exercise professional judgment and objectivity in
evaluating management’s financial reporting
decisions.
1.290.010.02 Other paragraph refers to the independence rule - the
extant also refers to objectivity.
1.290.010.03 Substantive
Change -
Attest Client
I recommend the following language to clarify this
paragraph and link it to what follows .03
Litigation or the expressed intention to commence
litigation between a covered member and an attest
client or its management and, in some cases, other
parties requires the covered member to assess the
materiality of the litigation to the covered member ,
covered member ’s firm , or the attest client , which
should include an evaluation of the nature of the
matter(s) underlying the litigation and all other
relevant factors.
1.290.010.04 Editorial
Suggestion
Related to "Litigation Between the Attest Client and
Member" - Subheadings such as these are helpful to
the reader. Consider using these more often
throughout the Code.
1.290.010.09 Editorial
Suggestion
Do not have link to Conceptual Framework for
Independence interpretation
1.295.000 Other Like the reconfiguration of ET 101-3 on nonattest
services. It flows well.
1.295.010.04 Editorial
Suggestion
related to "Activities Related to Attest Services" - The
placement of this guidance upfront seems odd given
that subtopic 295 focuses on nonattest services. The
IESBA Code incorporates this discussion in the section
on bookkeeping services (290.169).
1.295.010.05 Editorial
Suggestion
more restrictive than the provisions of the
interpretations
1.295.010.05 Is this now saying that an independence impairment
arising out of SEC rules constitutes an impairment
under AICPA independence rules, as well as a
violation under Interpretation 501-5? Why? Will this
change be highlighted in the exposure draft?
1.295.020 Name of
Interpretation
The title of this interpretation is inconsistent between
the Preliminary Codificaiton Framework and the Draft
Content. Recommend the title in the Preliminary
Codification Framework be revised to read
"Cummulative Effect on Independence When
Providing Nonattest services".
1.295.030.01 Editorial
Suggestion
If a member were to performs an activity that is a
management function, the management participation
threat would be so significant that no safeguards
could reduce the threat to an acceptable level.
Examples of some general activities that would be
considered management functions and therefore
impair independence areinclude:
1.295.030.01 e Editorial
Suggestion
determining which of the member's
recommendations of the memberattest client should
be implemented.
1.295.030.01 h Editorial
Suggestion
are built into the entity's normal recurring activities
of an entity;. tThese activities
1.295.040 .01 b Editorial
Suggestion
However, the individual is not required to possess the
expertise to perform or re-perform the services.
1.295.040.01 Editorial
Suggestion
Independence rule may exists - Appropriate change?
1.295.040.01 Editorial
Suggestion
Should this language be reworded in accordance with
the IESBA Code, paragraph 290.166? I.e., "To avoid
the risk of assuming a management responsibility, the
firm shall be satisfied…"
1.295.040.01 As a general comment, perhaps PEEC and staff may
want to consider modeling (here and throughout the
Code) its wording after the IESBA Code language,
which is clearer.
1.295.040.01 a Editorial
Suggestion
Include a cross-reference to 1.295.030, which covers
management functions?
1.295.040.02 Editorial
Suggestion
Do not have link to Documentation Requirement or
Management Functions interpretations
1.295.050.02 Editorial
Suggestion
The way in which this sentence has been structured
makes the guidance unclear. It is not evident at first
reading what the last clause applies to. See suggested
revisions. This guidance would be much clearer if
broken up into two sentences. - A fFailure to prepare
the required documentation does not impair
independence, provided that the member
established the understanding with the attest client.
butHowever, it would be considered a violation of the
Compliance With Standards rule, provided that the
member did establish the understanding with the
attest client.
1.295.050.03 Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 295.040?
1.295.050.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.105.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.105.03 Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 295.040?
1.295.105.03 Editorial
Suggestion
This paragraph would likely be clearer if it were
broken up into bullets addressing the various
requirements: the member complies with the General
Requirements interpretation, and the client accepts
responsibility for the service, etc, etc.
1.295.105.05 Editorial
Suggestion
when using the same assumptions and information
are used in performing the valuation.
1.295.105.06 Editorial
Suggestion
suggest adding the word "solely" after "valuation, or
actuarial services"
1.295.105.06 Editorial
Suggestion
related to "such as appraisal, valuation, and actuarial
services performed for tax planning or tax
compliance, estate and gift taxation, and divorce
proceedings" - Is the list of examples of services for
non-financial statement purposes meant to be an all
inclusive list? (i.e., are the three examples provided
the only instances that PEEC has determined to be for
non-financial statement purposes?) Can this be
clarified in some way?
1.295.110 What is the difference between the advisory services
and business risk consulting services? Do they really
address two different types of non-attest services?
Perhaps these two subtopics can be combined.
1.295.110 If the different services are intended to be addressed
alphabetically, then subtopic 295.110 ought to come
before subtopic 295.105.
1.295.110.01 Editorial
Suggestion
Related to "routine activities" - We were surprised to
see the comparison to routine activities, which are
not considered nonattest services. We would suggest
ending the sentence after "extensive advisory services
for an attest client".
1.295.110.01 Editorial
Suggestion
Examples of routine activities performed by a
member, such asinclude providing advice and
responding
1.295.110.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.110.02 Editorial
Suggestion
Applies the general requirements vs. "meeting" the
general requirements in 295.105.03. Which is the
appropriate term? The Code should be consistent
1.295.110.02 Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 1.295.040?
1.295.110.02 Editorial
Suggestion
Isn't this already covered by the General
Requirements interpretation (295.040)? Why repeat
this notion here and not for other services?
1.295.110.03 Editorial
Suggestion
related to "Management Functions interpretation" -
Include a cross-reference here to 295.030?
1.295.110.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.115.02 Editorial
Suggestion
Notwithstanding the conclusions reached in
paragraph .03 of this interpretation, a member
should comply with the more restrictive
independence provisions required byof the Employee
Retirement Income Security Act (ERISA) of 1974 and
DOL regulations must be followed when performing a
member audits of an employee benefit plans that is
subject to those regulations
1.295.115.03 Editorial
Suggestion
This is an odd way to phrase this clause of the
introduction. Independence would not be impaired if
the member performs the activities described in
bullets (a) through (e) - whether the attest client
engages the member is almost irrelevant. The focus
ought to be on what the member is doing, not the
attest client. See suggested revisions. - if, for example,
an attest client engages athe member to:
1.295.115.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.115.03 Editorial
Suggestion
related to "independence would not be impaired" -
Again…vs. "compliance with the Independence rule"
language
1.295.115.03 a Editorial
Suggestion
suggests changing "communicate" to "communicates"
1.295.115.03 b Editorial
Suggestion
suggests changing "advise" to "advises"
1.295.115.03 c Editorial
Suggestion
suggests changing "process" to "processes"
1.295.115.03 d Editorial
Suggestion
suggest changing "prepare" to "prepares"
1.295.115.03 e Editorial
Suggestion
suggest changing "prepare" to "prepares"
1.295.115.04 Editorial
Suggestion
related to the term "acceptable level" - This term
ought to be defined (consistent with the IESBA Code)
here and throughout the Code (or, alternatively, in
0.400).
1.295.115.04 Editorial
Suggestion
related to phrase "independence would be impaired" -
Here and throughout the codified Code, consider
adding headings to break up long discussions of
services, similar to the table headings in current
Interpretation 101-3 - i.e., permitted services,
prohibited services. It would be helpful to the reader.
1.295.115.04 d Editorial
Suggestion
Suggests deleting the word "net" before assets - This
should only say "assets," as stated in current
Interpretation 101-3
1.295.120.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.120.02 g Editorial
Suggestion
processes an attest client's payroll using payroll time
records that the attest client has provided and
approved by the attest client.
1.295.125.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.125.02 a Editorial
Suggestion
provides assistsance to management in its assessment of
1.295.125.02 b Editorial
Suggestion
provides recommendsations to management for improvements
1.295.130.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.130.02 e Editorial
Suggestion
provides adviceadvises to an attest client during
1.295.135 .02 c Substantive
Change -
Attest Client
This appears to be a change in guidance as the Code
has prohibited recommending specific candidate(s)
for specific postions (s) due to a self-interest threat
c. recommends qualified candidates to the attest
client for their consideration based on client-
approved criteria.
1.295.135.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.135.02 b Editorial
Suggestion
solicits and performs screensing of candidates based
on client-approved criteria
1.295.140 Editorial
Suggestion
Consider revising this subtopic on forensic accounting
services to clarify whether it is permissible to
represent an attest client in arbitration.
1.295.140.03 Editorial
Suggestion
For purposes of this interpretation, investigative
services include all forensic services that do not
involveing actual or threatened litigation
1.295.140.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.140.03 Terminology I recognize that the new code adopts the term
"investigative services" contained in the prior code,
but the definition really does not work in practice.
Many Investigative service engagements involve
actual or threatened litigation.
1.295.140.04 a i Editorial
Suggestion
if a member conditionally or unconditionally is
engaged conditionally or unconditionally to provide
expert witness
1.295.140.04 a iii Editorial
Suggestion
a fact witness, the trier of fact or counsel may
question a member may be questioned by the trier of
fact or counsel about the member's opinions
pertaining to the matters
1.295.140.04 a iii Editorial
Suggestion
related to "would not be considered a nonattest
service" - Is this an accurate statement? Serving as a
fact witness is not considered a service?
1.295.140.04 a i-ii Where is the guidance from footnote 27 of ET Section
101 that requires compliance with Rule 102, Integrity
and Objectivity, when a member provides expert
witness services? Shouldn't there be a cross-reference
here to Topic 1.100?
1.295.140.04 b i Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.140.04 b i Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 1.295.040?
1.295.140.04 b ii Editorial
Suggestion
Based upon a comment made on 1.265.020.02 Ellen
revised the phrase "would not be at an acceptable
level and could not be reduced to an acceptable level
by the application of safeguards".
1.295.140.04 d Editorial
Suggestion
related to the prior reference - Litigation can continue
for years. The transition guidance for forensic
accounting services in current Interpretation 101-3
should be retained in the codified Code.
1.295.140.04 d Editorial
Suggestion
Need to add the words after Conflicts of Interest
interpretation link "of the Integrity and Objectivity
rule"
1.295.140.04 d Editorial
Suggestion
Need to add the words after General Requirements
for Performing Nonattest services interpretation link
"of the Independence rule"
1.295.140.04 d Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 1.295.040?
1.295.145.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.145.02 a Editorial
Suggestion
attest client's financial information system that the
member did was not designed or developed by the
member
1.295.150 .03 a Editorial
Suggestion
Designates an individual or individuals who possess
suitable skill, knowledge, and/or experience,
preferably within senior management, to be
responsible for the internal audit function.
1.295.150 .07 a Cross
References
Performs ongoing monitoring evaluations (see the
paragraph .10) or control activities (for example,
reviewing loan originations as part of the attest
client ’s approval process or reviewing customer
credit information as part of the
1.295.150.01 Editorial
Suggestion
The sSelf-review
1.295.150.02 Editorial
Suggestion
the attest client outsources the internal audit function
to the member, wherebyand the member, in effect,
manages the attest client's internal audit activities of
the attest client.
1.295.150.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.150.03 b Editorial
Suggestion
those to be performed by the member will perform
in providing internal audit assistancethe services
1.295.150.03 c Editorial
Suggestion
those performed by the member will perform in
providing internal audit assistancethe services
1.295.150.04 Editorial
Suggestion
For example, provided thatif the member applies the
safeguards in paragraph .03 have been met, athe
member may assess whether performance is in
compliance with management's policies and
procedures, identify opportunities for improvement,
and develop recommendations for improvement
1.295.150.05 Editorial
Suggestion
SuchThe member information should provide the
1.295.150.06 Editorial
Suggestion
The member is responsible forshould performing the
internal audit services in accordance with the terms of
the engagement and reporting thereon. The
performance of such services and should be directed,
reviewed, and supervised by the member the
performance of the services.
1.295.150.07 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.150.07 Editorial
Suggestion
related to "Management Functions interpretation" -
Include a cross-reference here to 1.295.030?
1.295.150.07a Editorial
Suggestion
The reference to paragraph .10 should be removed
until such time as the content on monitoring
procedures is added back in.
1.295.150.09 Editorial
Suggestion
would not impair independencebe subject to this
interpretation
1.295.155.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.155.02 Editorial
Suggestion
related to "General Requirements for Performing
Nonattest Services interpretation" - Include a cross-
reference here to 1.295.040?
1.295.160.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.160.04 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.160.04 b ii Editorial
Suggestion
to the best of his or herthe individual's knowledge
1.295.160.04 b iii Editorial
Suggestion
file the tax return on the attest client's behalf of the
attest client
1.295.160.05 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.295.160.06 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.297.000 Editorial
Suggestion
Independence Standards for Engagements Performed
in Accordance With Statements on Standards for
Attestation Engagements (SSAE) - The Code doesn't
use the term "standards" in this manner elsewhere, is
the usage correct?
1.297.010 Editorial
Suggestion
Application of the Independence Rule to Engagements
Performed in Accordance With SSAEsStatements on
Standards for Attestation Engagements
1.297.010.01 Editorial
Suggestion
in accordance with Statements on Standards for
Attestation Engagements ( the SSAEs),
1.297.010.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.297.010.03 Editorial
Suggestion
In addition, application of the Independence rule is
furthera modified independence standard may be
applied, as set forth
1.297.020 Editorial
Suggestion
Agreed-Upon Procedure (AUP) Engagements
Performed in Accordance With SSAEs - last part
unnecessary
1.297.020.02 Editorial
Suggestion
related to "may apply" - This reads almost as if a
member can choose otherwise. We suggest that the
language be modified in a manner similar to
suggestions in 1.297.010.03 above.
1.297.020.02 Editorial
Suggestion
related to term "standard" -Vs. rule?
1.297.020.02 Editorial
Suggestion
Do not have link to Engagements Performed Under
Statements on Standards for Attestation
Engagements interpretation
1.297.020.03 Editorial
Suggestion
Do not have link to General Requirements for
Performing Nonattest Services interpretation
1.297.020.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule"
1.297.020.03 Editorial
Suggestion
related to phrase "independence would not be
impaired" - Use the standard language - i.e., Threats
would be at an acceptable level…etc.
1.297.020.05 Editorial
Suggestion
Need to add the words after each interpretation link
"of the Independence rule"
1.297.030 Editorial
Suggestion
Why is this subtopic/interpretation necessary? Why
hasn't this guidance been included in subtopic
1.297.010? It may be confusing for the reader to start
discussing SSAE engagements, then move to AUPs,
then move back to SSAE engagements again. It just
creates unnecessary duplication - for example,
paragraphs .01 and .02 are repeated in 1.297.010.
1.297.030 Other What is the difference between the types of
engagements addressed in1.297.010 and the
engagements addressed 1.297.030?
1.297.030.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Independence rule" & ET reference
1.297.030.02 Editorial
Suggestion
related to "may apply" - This reads almost as if a
member can choose otherwise. We suggest that the
language be modified in a manner similar to
suggestions in 1.297.010.03 above.
1.297.030.03 Editorial
Suggestion
Need to add the words after each subtopic link "of the
Independence rule"
1.297.030.03 b Editorial
Suggestion
Need to add the words after each interpretation link
"of the Independence rule"
1.300.000 Editorial
Suggestion
Is this is an odd placement for this topic? Should it be
included at the beginning of the Code?
1.300.001 General
Standards
Addition of new sections on the application of the
Conceptual Framework provides a better
understanding of how to navigate and apply the
applicable guidance. Moving the Ethical Rulings (ER)
into the respective subject sections and converting
them from Q&A format makes the AICPA Code more
helpful and clearer to readers. Agree with rewrites
and the headings of the ERs.
1.300.005 Issue that the threats and safeguards approach may
be not as relevant in this context - the threat and
safeguard categories identified in the conceptual
framework of the draft appear more closely aligned to
independence than to the general standards. Some
might apply but not all. It seems like for this model to
be workable the conceptual framework should be
revised to be broader. The conceptual framework also
just references independence rules, so it would seem
this would need updated as well.
1.300.010.01 Drafting
Convention
Add an s to supervise and evaluate?
1.300.010.03 Drafting
Convention
The 2nd sentence needs rephrasing - try this - "A
normal part of performing professional services
includs additional research and consultation with
others to gain sufficient competence."
1.300.010.04 Drafting
Convention
The sentence ends in an unclear dangling modifier -
"either independently or as an associate" ?
1.300.020.01 Editorial
Suggestion
Combining this Q&A into a single paragraph does not
introduce any substantive change, however, the
"must" in the extant as been changed to "should" in
the proposed interpretation. Why has the
requirement been reduced from "must" (an
unconditional requirement) to "should" (a
presumptively mandatory requirement)? The nature
of the requirement suggests that "must" is more
appropriate than "should," but not sure if this change
was a result of a policy decision to replace all of the
"musts" with "shoulds."
1.300.030.01-.02 Editorial
Suggestion
The proposed interpretation relates to members in
public practice by virtue of its placement in part 1,
which applies to members in public practice;
however, par.02 also refers you to relevant
interpretations in part 2, which applies if you are a
member in business. As stated par. 02 of the Preface
(see p.15), "When a member has multiple roles, the
member should consult the applicable parts of the
AICPA Code." Apparently the 2nd paragraph of the
Answer in the extant (ET291 ER10) interpretation is
deemed to be the relevant "public practice" content
(agree that it has no relevance to a member in
business), whereas the 1st paragraph is deemed to be
the relevant "member in business" content (the
"member in business" equivalent of this
interpretation is reproduced in the line below, first
column). But the "member in business" content also
seems to apply to the member in public practice who
now has to go to two different places for an answer.
Overall the extant (ET291 ER10) seems both clearer
and simpler.
1.300.030.02 Editorial
Suggestion
Do not have link to Submission of Financial
Statements interpretation
1.300.040 linkage appreciate the linkage to confidential client
information provided in para. 03
1.300.040.01 Editorial
Suggestion
This is another instance in which "must" in the extant
(see paragraph .024 of ET291 ER12) has been changed
to "should" in the proposed. "Must" seems more
appropriate in this context. See commentary under
Supervision of a Specialist on Consulting Engagements
for further details.
1.300.040.01 Editorial
Suggestion
The proposed interpretation combines two extant
interpretations (ET 291 ER8 & ER12). Proposed
paragraph .01(a) is substantially the same as extant ET
291.016 in terms of evaluating the professional
qualifications, technical skills, and resources of a third-
party service provider. Proposed .01(b) is substantially
the same as extant ET 291.024 although it omits the
sentence that "the member remains responsible for
the adequate oversight of all services performed by
the third-party service provider." That statement
seems unnecessary, however, given the requirement
that the member must (assuming here that "must"
will be restored) adequately plan and supervise the
third-party service provider's professional services so
that the member ensures that the services are
performed with competence and due professional
care.
1.300.040.03 Editorial
Suggestion
The interpretations cited in the proposed
interpretation have the same content as those cited
in the extant interpretation (ET 191 ER112 & ET 391
ER1), except as follows: ET 1.150.040 omits the
sentence "this disclosure does not relieve the
member from his or her obligations under ethics
ruling No. 1," which appears in extant ET 191.225.
Why delete this since it seems to be helpful guidance?
The interpretations that are cited in both the extant
and in the proposed also appear to overlap and might
be candidates for combination, or at least reviewed to
eliminate the apparent redundancy, or are such
changes beyond the scope of this project?
1.310.005.01 Editorial
Suggestion
Do not need ET references since already given in
1.300.005 & 1.300.030
1.310.005.01 Editorial
Suggestion
See previous discussion regarding the conceptual
framework
1.320.005.01 Editorial
Suggestion
Do not need ET reference for Conceptual Framework
since in 1.300.005
1.320.010 Name of
Interpretation
This section is based on prior 203.05, which relates to
responsibility of employees for the preparation of
financial statements. Although it applies to all
members who state affirmatively that financial
statements are in conformity with GAAP, I believe the
title should be changed to: "Responsibility for
Affirming that Financial Statements are in Conformity
With Generally Accepted Accounting Principles
1.320.010.01 Other I believe this section below relates to a member in
their role as an employee of the company and should
be deleted from Part 1 of the Codification. If it
remains, it should provide an example of how it
relates to a member in public accounting. The
remaining language is consistent with the role of a
member in public accounting:
"A member’s representation in a letter or an other
communication that an entity’s financial statements
are in conformity with GAAP may be considered an
affirmative statement within the meaning of this rule
with respect to the member who signed the letter or
other communication (for example, the member
signed a report to a regulatory authority). "
1.320.020 Other Council has designed three bodies here to establish
accounting principles, however, in 1.320.030 below,
they also include the IASB. .01 and .02 should include
the IASB. At the end of .01 the following should be
added: "Council also
designated the International Accounting Standards
Board (IASB) as an accounting body for purposes of
establishing international financial accounting and
reporting principles." .02 should also add IASB after
FASAB.
1.320.030.01 Other I believe paragraph 1.320.030.01 should be added as
.03 to 1.320.020, as this does not relate to Departures
From Generally Accepted Accounting Principles
1.320.030.05 Editorial
Suggestion
Add an "s" after departure, as more than one are
discussed.
1.320.040.03 c Editorial
Suggestion
an other comprehensive basis - another?
1.320.040.04 Editorial
Suggestion
related to "reports thereon should not purport" -
Guidance lapses into sudden legalese out of the blue.
1.320.040.04 Structure of
Code
The requirements and responsibility for the client’s
financial statements should not be with the member
in public practice, as those are the responsibility of
management. The remainder should be in Part 2 for
members in business. This should make reference to
the reports on those financial statements only:
"04. In such circumstances, however, the client’s
financial statements and member’s reports thereon
should not purport that the financial statements are
in accordance with GAAP, and the reports on those
financial statements, should clarify the financial
reporting framework(s) used. [Prior reference:
paragraph .06 of ET section 203]
1.400.010-.240 Structure of
Code
There are numerous examples listed that would meet
the standard. .010 says “presumed to have
committed”; .020 “shall be considered to have
committed”;.030 “may be considered to have
committed”; .040 “shall be considered in violation”;
.090 “would be in violation”; .210 “would be
considered in violation”; .240 “would be in violation.”
They are not in any order.
I believe that these paragraphs should be listed in
order of severity in terms of whether or not an act
discreditable has occurred.
1.400.050 structure believe should follow other sections,
1.400.050 and .055 Structure of
Code
050 and .055 refer to government bodies and audits
and should be organized after the paragraphs noted
above, which appear more egregious.
1.400.050.02 Editorial
Suggestion
organizations, in addition to the applicable financial
reporting frameworkgenerally accepted accounting
principles
1.400.050.03 Editorial
Suggestion
requirements, in addition to generally accepted
auditing standardsthe applicable financial reporting
framework.
1.400.050.04 Editorial
Suggestion
"Is" in the extant (Interpretation 501-5) has been
changed to "would be considered" in the proposed
which is not deemed to be a substantive change
1.400.055.02 Editorial
Suggestion
Since the proposed interpretation retains from the
extant the "undertakes an obligation" language at the
beginning of the sentence, why was the phrase at the
end of the sentence changed to "the member should
follow" instead of retaining "the member is obligated
to follow" from the extant (Interpretation 501-3)?
1.400.055.03 Editorial
Suggestion
Is in the extant (Interpretation 501-3) has been
changed to "would be considered" in the proposed
which is not deemed to be a substantive change
1.400.060 linkage also link to independene rule 200.020
1.400.060.02 Editorial
Suggestion
Do not have link to Acts Discreditable rule
1.400.070 Other A statement should be added that this section does
not apply to a CPAs resume where their job skills and
experience are required to be displayed for the
purposes of obtaining employment.
1.400.090 Editorial
Suggestion
Why did we skip 1.400.080 (I don't see if used in any
other part)
1.400.090 Other A statement should be added that CPAs employed by
staffing or non-CPA consulting firms are held to the
standard laid out in this section. The marketing and
sales function in staffing firms and non CPA staffing
firms can be false, misleading, or deceptive with
respect to how they sell human capital to their clients.
Sales people who are not CPAs and have never
worked in accounting are often the sales people in
these firms. In order not to lose a commission, the
sales person will say just about anything necessary to
place a candidate, going as far as modifying their
resume sent to that client. CPAs working for these
firms are not part of the sales process and have no
control over what occurs. When an industry
employer wants a CPA to staff their SEC reporting
function, the staffing firm will provide one, even if
that person as relatively little experience, this practice
is misleading. The definition of Professional Services
includes Consulting and client advocacy work, and
that is the type of work that staffing and non CPA
consulting firms do, and that is why they employ
CPAs. However, with the State Boards unconcerned
with these CPAs, there is no oversight. A complaint
cannot be lodged by a client at the Better Business
Bureau either since these firms do not sell products,
they sell people.
1.400.090.03 Editorial
Suggestion
Says no prior reference but I think it should be
referenced to paragraph .11 of ET section 501
1.400.100 Other As you might be aware, I would like to see it stated
that CPAs working for staffing or non-CPA consulting
firms are not allowed to use their designation of CPA
if the State Board does not regulate these types of
firms. The CPA may retain their license under State
Law, but cannot use it if they are working for a
company that has no ethics oversight or governance
in the State where the CPA is working. I would also
like to see the State Board’s adopt a similar rule. Why
should the staffing industry and non CPA consulting
industry benefit from the CPA brand, and take work
away from CPA firms, while the CPAs inside those
firms are not governed under the jurisdiction of their
State Board? CPAs should not be allowed to state on a
resume or professional profile or website that they
are a CPA unless they are working for a company that
is governed by a State Board of Accountancy. Period.
1.400.200 Drafting
Convention
This is the only paragraph that has separate
“terminology” and “interpretation”. It should be
consistent with the other paragraphs. Records
Requests and retention is a very important area, and I
believe it should be moved up front in 1.400
1.400.200 Other Are there clear guidelines to review on providing
Records when requested between CPA firms when a
client leaves the firm? We deal with this issue
probably more than any other.
1.400.200.05 a Editorial
Suggestion
I think it might to easier to read if you put parenthesis
around "under paragraphs .03-.04
1.400.200.06 Other Can we add examples here? (e.g. general parnter,
majority shareholder, spouse)
1.400.240.070 structure should be links to confidential information ( 700)
1.500.001 editorial
suggestion
I would bold "any" in a ., and also in b.
1.500.001.03 editorial
suggestion
there is always confusion for this rule. Please
consider adding "if the fee is fixed by courts or other
public authorities, or in tax matters, if the fee is
determined based on the results of judicial
proceedings….. This emphasized the fee is decided by
a third party, not the results.
1.500.002.02 Editorial
Suggestion
I think you should clarify services listed above like you
did in 1.500.001.02 so it might say "services listed in
1.500.002.01 above"
1.500.002/ .01 a. Other Typo in a. Should read - "an audit or review of a
financial statement; or"
1.500.005 Conceptual
Framework
This section is called Conceptual Framework for
Members in the Practice of Public Accounting. I would
think this discussion should be before the rules are
covered.
1.510.010 Editorial
Suggestion
On page 141, in paragraph 5, the heading to the
paragraph is: "Example of When A Contingent Fee Is
Not Permitted." However, the wording within the
paragraph is such that the fee is permitted. I don't
think the fee is permitted so that the issue appears to
be with the wording in the paragraph.
1.510.010.04f Contingent fee
rule
This is not an issue with the codification. It relates to
the current rule. The AICPA currently allows a
contingent fee when "represening a client in
connection with obtainin a private letter ruling or
influencing the drafting of a regulation or statute."
Contingent fees for private letter rulings do nto
appear to be allowed under Circular 230 Section
10.27(b) that indicates when contingent fees are
allowed. Further, contingent fees for lobbying may be
prohibited by state law (e.g., Hawaii).
1.510.010.05 Editorial
Suggestion
The prior reference should be "of ET section 302" not
302.02
1.510.010.05 Editorial
Suggestion
Should read as follows: A contingent fee is not
permitted……..filed return. (appears to be a typo at
the beginning of the sentence)
1.510.010.05 Editorial
Suggestion
I think the first sentence should be "A Contingent fee
is not permitted if a …."
1.510.010/.03 Mapping At the end of .03 - reference paragraph .02 - consider
hyperlinking to paragraph .02.
1.510.010/.04 Editorial
Suggestion
In e. to emphasize the words protest and assessed
value - consider adding quotes ("protest" / "assessed
value")
1.510.010/.04 Other In paragraph .01 under 1.510.010 - there is a sentence
that says " When practicign before the IRS or
before….. also comply with other applicable or more
restrictive requirements." A similar sentence should
be added under (or cautionary language) paragraph
.04 (Examples of When a Contingent Fee is
Permitted). The sentence could read -"Although a
contingent fee or determined fee may be permitted
under the Contingent Fees Rule, the member should
exercise caution that the fee structure is permitted
under the independence rules of other independence
standard-setters, the applicable state boards of
accountancy, or the IRS Code or the taxing regulatory
agencies." < underlined the Contingent Fees Rule - so
it is also hyperlinked.
1.510.010/.05 Editorial
Suggestion
In the first sentence - consider removing the word
"valid". Then consider adding a second sentence:
"There is no question as to the propriety of the
deduction; rather the claim is filed to correct an
omission."
1.510.030 Editorial
Suggestion
There is a. and b. - shouldn't the word "and" be added
after a. Both of these need to present. or the lead in
in paragraph .01 can be changed - by adding the word
"both" after "if".
1.510.040.01 Cross
References
In a. and b. - hyperlink to Contingent Fees rule (since
it is cross-referenced)
1.510.040.01 a & b Editorial
Suggestion
Do not have links to Contingent Fees rule
1.510.050 Other should the reference to the "investment portfolio to a
client" refer to an "attest client"?
1.510.050.01 Editorial
Suggestion
In a. change the word "on" to "as".
1.520.030.01 Editorial
Suggestion
There is an a. and b. - shouldn't the word "and" be
added after a. Both of these need to present. or the
lead in in paragraph .01 can be changed - by adding
the word "both" after "if".
1.520.030.02 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.520.050 .01 Editorial
Suggestion
The ruling is written to cover all attest and nonattest
clients. Therefore, a. should read "Owners, officers,
or employees of an attest client." ( hyperlink to attest
client; don't need to hyperlink to paragraph .01 if
referencing to attest client)
1.520.050.01 a & b Editorial
Suggestion
Do not have links to Commissions and Referral Fees
rule
1.520.050.03 Editorial
Suggestion
Need to add the words after interpretation link "of
the Integrity and Objectivity rule"
1.600.030 Other Use of PFP designation - is this needed? Or should it
be expanded to all the other credentials?
1.600.030.01 Question Should you consider a broader definition of the AICPA
specialties? We now have the ABV, CITP, CFF, CGFM
specialties. Further, the indication that all members
of the firm must be a PFS before the firm name and
letterhead can be used is, in all reality, not being
practiced.
1.700.010 Definitions I believe the term “all relevant parties” should be
defined.
1.700.020.01 Editorial
Suggestion
I believe as written it is not clear whose confidential
information is being shared with whom. I suggest the
following changes bolded:
".02 When a member evaluates whether to accept a
new client engagement, the member should consider
whether knowledge and experience that the member
or member’s firm will share with a prospective client
while providing the professional services to the
prospective client would be confidential client
information of an original client. If such information
would be confidential client information, and the
circumstances are such that the prospective client
would be able to identify the client or clients that are
the source of the information, the engagement
should not be accepted, unless the member obtains
the original client’s specific consent to disclose the
information. "
1.700.020.01 editorial
suggestion
When a member evaluates whether to accept a new
client engagement, the member should consider
whether the prospective client would be obtaining
knowledge and experience provided by member or
member’s firm will share while providing the
professional services to the prospective client would
be considered to be another client's confidential
client information. If such information would be
confidential client information, and the circumstances
are such that the prospective client would be able to
identify the client or clients that are the source of the
information, the engagement should not be accepted,
unless the member obtains the original client’s
specific consent to disclose the information.
1.700.020.03 Substantive
Change - Not
Identified
The connotation appears to have changed - "The
Confidential Client Information rule is not intended to
help an unscrupulous client cover up illegal acts" -
This seems to suggest that it is ok to release
confidential client information in situations of illegal
acts. I was not aware of this. Can you now report
information to the IRS? To the FBI? I know that the
IESBA is working on this but I didn't think that the
guidance had been finalized.
1.700.030 Name of
Interpretation
The title refers to “Persons” who are not defined.
Since .03 refers to disclosing information “to the
company”, I suggest the following title change: "
Disclosing Information to Persons or Entities
Associated With Clients"
1.700.030.01 Editorial
Suggestion
Who retains us should be evident. I suggest the
following change bolded:
"When a member is engaged to prepare a married
couple’s joint tax return, both spouses are considered
to be the member’s client, even if the member was
engaged by one spouse and deals exclusively with
that spouse.
1.700.030.02 spelling both spouses are considered to be the member's
clients.
1.700.040.02 editorial
suggestion
the member should do one or the other of the
following either:
1.700.040.03 Editorial
Suggestion
Need ET Reference for both Use of a Third-Party
Service Provider interpretations
1.700.050.01 Editorial
Suggestion
Do not have link to Confidential Client Information
rule
1.700.080 Editorial
Suggestion
I believe the rules should be defined in reference to
para. 01 – Integrity and Objectivity Rule and the
Confidential Client Information rule to clarify what
rules are being referred to:
" Under such an arrangement, the member could limit
activities to those that do not threaten the member’s
compliance with the Integrity and Objectivity Rule
and the Confidential Client Information rule."
1.700.080.01 Editorial
Suggestion
Need ET reference for Integrity and Objectivity rule
1.700.080.02 comment I think that expanding the member's restrictions for
joining boards of various organizations beyond a bank
or other obvious publicly served organization dealing
with individuals or organization private or financial
information, is going beyond the original intention. It
could result in harmful litigation to members, since
they may be considered not in compliance with the
Code. Who determines what type of position and
organization is problematic?
1.700.090.01 Other The extant paragraph conclusion states that
disclosure "would suggest that the client may be
experiencing financial difficulties." (ET 391.013) The
new section states that it "would indicate that the
client is experiencing financial difficulties." I believe
the language from the extant should be used as the
codification assumes that by using a firm limited to
bankruptcy matters assumes that the entity is
experiencing financial difficulties. There is no basis to
make that assumption unless examples are provided.
1.700.090.01 Substantive
Change - Not
Identified
Disclosing client names - The connotation is different
from the extant which includes a positive affirmation
of the ability to disclose client names.
1.700.100.02 Observation This guidance is relatively weak. My personal
experience, for example, includes several instances
where the CPA has been served a Grand Jury
Subpoena with the notification that the client is not to
be notified of the request. The CPA, however, is in
the middle of an audit or completing an engagement.
The knowledge of the subpoena has put the CPA on
notice that some form of a governmental
investigation is underway and, I would suggest,
imposes a duty on the CPA to further investigate the
issue or disclose the existence of an investigation.
Your guidance is too weak for the member in this
section.
1.800.001 Form of
Organization
and Name
Addition of new sections on the application of the
Conceptual Framework provides a better
understanding of how to navigate and apply the
applicable guidance. Moving the Ethical Rulings (ER)
into the respective subject sections and converting
them from Q&A format makes the AICPA Code more
helpful and clearer to readers. Agree with rewrites
and the headings of the ERs.
1.800.001.03 Observation We have a non-CPA partner who is an associate
member of the AICPA; does this preclude this firm
from representing that we are "Members of the
AICPA"?
1.800.001.04 Editorial
Suggestion
The prior reference should be "of ET section 505" not
505.01
1.810.010.04 Editorial
Suggestion
I don't think you link member to definitions when
saying nonmember. We have member linked enough
times that I think that might be confusing.
1.810.010.06 Editorial
Suggestion
Under prior reference - you have an incorrect prior
reference in .21-.22 of ET Section 101 - there is no
section .22
1.810.020 Cross
References
Agree with rewrite - Prior reference left off "591"
after ET Section
1.810.020.01 Editorial
Suggestion
Do not have link to Form of Organization and Form
rule
1.810.030 comment Agree with emphasis, clarity on member's
responsibilities
1.810.030.01 Editorial
Suggestion
I don't think you link member to definitions when
saying nonmember. We have member linked enough
times that I think that might be confusing.
1.810.030.02 Editorial
Suggestion
I don't think you link member to definitions when
saying nonmember. We have member linked enough
times that I think that might be confusing.
1.810.040 Other Is this guidance needed? In Pennsylvania, a CPA and
Non-CPA cannot form a CPA firm and therefore could
not issue this report at all. I would think that this is
going to vary from state to state and I am not sure
that the guidance is particularly helpful - This may be
outside of the purpose of this task force, but it is
interesting how the Codification highlights things that
are currently buried in the Code.
1.810.050 comment Agree with drafting convention, showing member's
responsibility to make disclosures, recommend
linkage to resolutation
1.810.050.02 Editorial
Suggestion
Recommend that the sentence "To protect the public
interest, the overriding focus of the resolution [Link
to Appendix B] is that CPAs remain responsible,
financially and otherwise, for a firm’s attest work. In
addition to the provisions of the resolution [Link to
Appendix B], other following requirements of the
AICPA Code and Bylaws the resolution’s
requirements ensure that responsibility" be edited as
noted.
1.810.050.02 d Editorial
Suggestion
Do not have link to Compliance with Standards rule
1.810.050.02 d Editorial
Suggestion
Do you want to include link to ET 0.200 since you
reference it?
1.810.050.02c Editorial
Suggestion
Recommend that the sentence "Compliance with the
AICPA I independence rule [Link to the independence
rule] prescribed by the independence rule" be edited
as noted.
1.820.020.01 Other A Practice with Non-CPA Partners - Is this true in all
states? I am not sure that this is accurate for PA and I
am not sure why it is needed in the Code since it
seems to be a state statute issue.
2.000.000 Editorial
Suggestion
My concern (also shared by my colleagues at GAO) is
without specifically referring to members in
government, we do not recognize what part of the
restructured code we fall into. As you mention in the
cover letter for the pilot testers, there are three parts
divided by the member’s practice. Part 1 is applicable
to members in the practice of public accounting. I can
argue that GAO, Federal IGs, and many state and local
governments are very similar to public accounting in
what they do, but we are also employees of the
government. Part 2 is applicable to members in
business. Some may argue that CPAs that are in
internal audit functions or are in financial
management functions in the government may be in
Part 2. Part 3 is applicable to all other members such
as those who are retired or unemployed. A literal
reading of this criteria would place all CPAs in
government under part 3. This is not logical since I
think there should be government members that fall
under the other 2 parts. Without explanation of the
applicable part to the range of members in
government, the codification is difficult to apply to
these members. Since I also serve on GPAC, I need to
point out that about 12,000 members are employed
in government. Without a clear guidance on which
part of the codification applies to these members, it is
very difficult to use.
2.000.010 Editorial
Suggestion
I think we need to include the need to document this
process. I believe there is a documentation
requirement under the conceptual framework
2.000.010.02 Drafting
Convention
can we remove reference to the AICPA Code?
2.000.010.02 Editorial
Suggestion
Do not have link to Integrity and Objectivity rule
2.000.010.13 Editorial
Suggestion
Self-review threat description hard to understand.
Need to rework - not sure if it is the punctuation or
what.
2.100.005 Editorial
Suggestion
Left out the word in - "Members in Business"
2.110.010.01 Other Can we provide examples?
2.130.020.01 Editorial
Suggestion
Do not have link to Integrity and Objectivity rule
2.310.005 .01 Editorial
Suggestion
Do not need ET reference for Conceptual Framework
since in 2.300.005
2.320.001 editorial
suggestion
The current Code provides a better explanation of
why the Rule was adopted ( 203-1). I believe this
should be incorporated in the "new" Code.
2.320.005.01 Editorial
Suggestion
Do not need ET reference for Accounting Principles
rule since in 2.300.030.01
2.320.020.01 Editorial
Suggestion
Do not have link to The Accounting Principles rule
2.320.030.02 Editorial
Suggestion
Do not have link to The Accounting Principles rule
2.320.030.03 Editorial
Suggestion
Do not have link to The Accounting Principles rule
2.320.033 ediorial
comment
I believe the placement of "not" before rendering, is
better grammar, and leads to better understanding
than the wording in int 203-1
2.320.040.03 Editorial
Suggestion
Do not have link to The Accounting Principles rule
2.400.010 editorial
suggestion
A comma is necessary after "jurisdiction"
2.400.070 editorial
suggestion
It would be helpful if there was a link to term
"confidential information" for clarity.
3.400.090 Editorial
Suggestion
Prior reference: paragraph .11 of ET Section 501 -
currently says new content
General Comment Name of Topic The use of the word "rule" to the rules makes for
cumbersome grammer. Couldn't we say Rule -
Independence then we can refer to the rule on
indpendence rather than the independence rule. I
can learn to live with it but it in many cases sounds
contrived.
General Comment Structure I appreciate the incorporation of the Conceptual
Framework into the "new code", clarification of the
terminology used in the Code, and the inclusion of the
interpretations as now constituting part of the Code.
General Comment Structure of
Code
I find having the conceptual framework in 3 places is
cumbersome. Is there no way to have it included
once? Also, its status within the Code is not clear. Is it
an interpretation?
Numbering Numeric
Citations
Use of “0” for the preface numbering system
somewhat odd
Numbering Numeric
Citations
Use of “0” for the preface numbering system
somewhat odd
Numbering Numeric
Citations
I continue to struggle with the two part structure - 0
Preface and Parts 1-3. I clearly understand that the
Preface represents the Principles of Professional
Conduct and the balance represent the "Rules", but
from a structure standpoint I would recommend you
incorporate then into one document with a consistent
referencing system.
Numbering Numeric
Citations
The structure (numbering and formatting) does not
clearly offset the Rules from the Interpretations - For
example the 1.100.0001 - Integrity and Objectivity
Rule - is at the same numbering level as the 1.110.010
Confilcts of Interest. I am wondering if either the
numbering could change or the formatting (e.g.
shading the rules). Given the current formatting, for
example, it is not clear that there are any
interpretations under the Integrity and Objectivity
rule.
Overall Conceptual
Framework
Overall, especially when compared to the guidance in
the IESBA Code of Ethics, we still have quite a bit of
"specifics" incorporated into the guidance so that I
think many folks are going to say something like: You
have provided us with the conceptual framework to
use in addressing independence matters, but then
you just gave specific answers to specific questions
related to many of the issues that might even appear
to be inconsistent with conclusions we would reach as
practitioners in applying the conceptual framework. I
know there is a delicate balance that needs to be
addressed here in that many folks are going to want
the conceptual guidance where they can use their
professional judgment, and others are going to want
the specific rules/interpretations so they don't have
to think. Personally, I would rather go to more use of
the conceptual framework [professional judgment]
than having to focus on things that are specifically
allowed or precluded. Essentially, if you have threats,
see if there are safeguards that can reduce or
eliminate the threats and document what you did in
this area.
Overall Definitions Finds the mulitiple hyperlinks to the definitions
excessive and would prefer if the hyperlink was done
on first mention topic/subtopic (or paragraph……
particularly if a topic/subtopic has many paragraphs in
it).
Overall Editorial
Suggestion
Because so much was added in some places, the
period that independence was impaired could
become unclear so might want to repeat it.
Specifically in the 1.297 topic.
Overall Editorial
Suggestion
Found the fact that the Application of the conceputal
framework interpreation came before the
independence concepual framework, inconsistent
with the fact that the broad concepual framework
comes before the other Application interpeations.
Overall Editorial
Suggestion
Recommends the term "Interpretation" be added to
the title of any interpretation so that it is clear what
items are interpretations.
Overall Numeric
Citations
On the subject of the numbering system, overall, and
as noted in several of our comments on the
codification, the proposed numbering system is
complex, unwieldy, and not user-friendly. Staff and
PEEC need to ask themselves if this new numbering
system is an improvement over that used in the
current Code.
Overall Numeric
Citations
They note that the citation for 1.120.010.01a is ten
characters long. They say that the numbering system
being proposed is too unwieldy, unnecessarily so, and
not as user-friendly (compare this citation to
Interpretation 101-11, for instance), or easy to
remember, etc. Staff and PEEC need to ask
themselves if this new numbering system is an
improvement over that used in the current Code
Overall Numeric
Citations
Overall, the numbering system might prove to be
challenging for folks using the guidance in that you
can go several pages within each section of many of
the captions before you even get to another
numbered captioned.
Overall Other Will it be clear to a member who holds InActive Status
with a State Board what their obligations are versus a
member with no status with a State Board? Does
State Board status really matter under the code?
Overall Other Would not part of the public interest include
remaining properly registered with a State Board for
those required to within public practice and to follow
state and federal requirements?
Overall Other When the Conceptual Framework is applied by the
member and the decision made is determined to be
“way off base”…..since the member applied the
framework..what kind of review can be applied? Can
they use the “excuse” they applied the required
framework….this would lend me to comment that
based on experience and feedback direct applications
of Independence should be applied when warranted
by PEEC.
Overall Other I do not think I will be submitting any formal
comments. I have used the codification to research a
few issues and haven’t notices any deficiencies in the
guidance and quite honestly I haven’t spent a lot of
time on the number conventions etc. I think as a
whole the codification is extremely well crafted and
developed and definitely the right answer for the
Code
Overall Other The content is so extensive that a reader might get
lost in it.
Overall Other I like the new format and think that embedding the threats
in each section is extremely helpful. I had mentioned on a
previous call that I was concerned about the ease of
printing various sections of the documents because of the
hyperlinks, as I often cut and past sections directly into
memos.
Overall Structure of
CodeThe flow of the codified Code was somewhat
disjointed with readers having to frequently stop and
look at another section for clarification. The intent
behind cross-references should always be clear; the
guidance should always explain why it is pointing
readers to another topic/subtopic/interpretation. The
complex numbering system also makes it a challenge
for readers to look up cross-referenced guidance.
Overall Structure of
Code
The AICPA code of conduct as written, applies only to
CPAs working in CPA firms, or as employees in
industry. As of 2012, and long before that over the
last decade, there are 10’s of thousands of CPAs
working for non-CPA consulting firms and staffing
firms that provide client advocacy services as defined
by the Code of Conduct to their clients where those
CPAs are using their expertise and credential as CPAs
in carrying out their work. My poll revealed that State
Boards, do not consider CPAs who work for Staffing
firms or Non-CPA firms to be CPAs that can be
investigated for ethics violations reported under a
contract engagement with a client of their firm
employer. I found this surprising. The State Boards
also do not track employer demographics for CPAs so
there is no way to know how many CPAs work for CPA
firms, Industry employers, or the 3rd category -
Staffing and non-CPA consulting firms. According to
the discussions I have had, staffing and non-CPA
consulting firms that employ CPAs are not treated as
industry employers for State Board purposes either,
meaning these firms fall under State contract law,
rather than State Board jurisdiction, ethics complaints
are not pursued against the CPAs working in these
firms. The State Boards are quite adamant about this.
Therefore there are thousands of CPAs who are not
covered by ethics statutes in their State, nor by the
AICPA Code of Professional Conduct. This is where
there is an extremely large gap in the law regarding Overall Structure of
Code
The placement of some of the guidance might be a
little confusing, where I will address this matter in
more detail in answering the overall question 3
related to fees. Essentially, in some cases, the topics
do not appear to be logically tied together so that the
concern would be, even with the cross-references,
some folks just might miss the guidance that is placed
elsewhere in the Code, especially if folks are using a
hard-copy of the guidance when compared to the e-
copy of the guidance.
Overall Structure of
Code
Regardless of State requirements, the AICPA
Professional Code of Conduct is the unifying standard
by which the public gauges CPAs. Making it applicable
to a membership subset of CPAs, those with an AICPA
membership is not consistent with how the Code is
applied nationally. Due to my concern that the AICPA
Code of Professional Conduct is being updated and
applicable to only the Members of the AICPA, a
subset of the CPAs in America, I polled the State
Boards via an email questionnaire to provide evidence
to the AICPA that more than several States have
either adopted the Code into State Law, State
Regulation, or CPA Board Rule and by doing so, those
States have legislated that all CPAs in those States are
bound to the AICPA Code of Professional Conduct,
regardless of AICPA membership. She provided
feedback on the poll in her letter. She recieved
feedback from only 58% as others were still to
respond. See letter for details.
Overall Table of
Contents
Check the numbering on the table of contents as it
seems to be off in a number of places.
Overall Gaylen suggested we change references to GAAP to
the Applicable Financial Reporting Framework.
Accordinlgy to Ahava, the staff person most familiar
to the changes to our other standards, she believes
changing to the generic term "the applicable financial
reporting framework" is a good move and would be
aligned with the ISAs. My concern is that our
Accounting Principles rule refers to GAAP still so I
would prefer to discuss with the Task Force before
making any changes.
Overall Gaylen suggested we change references to illegal acts
with compliance with laws and regulations. The term
"illegal acts" is used in 1.700.020 and 1.255.020. I
would like to discuss making the replacement as both
would need to be reworked to make sense.
Part 3 Other Is there a need for guidance on commissions and
referral fees?
Question 1 Question 1 Generally the titles seem okay.
Question 1 Question 1 Generally the titles seem okay. Does not believe the
term “engagement period” is not in the definitions
section and the content does not match the words.
Also, the term “Subsequent Events” has a generally
accepted meaning in the CPA profession and
describes heading 1.226 more closely.
Question 1 Question 1 The title for 1.226 isn't intuitive.
Question 1 Question 1 The titles appear appropriate to the NON CPA in
me….again; I really believe this system will assist the
public and regulators…..GREAT JOB!
Question 1 Question 1 Titles are sufficently accurate and informative
Question 1 Question 1 I have previously questioned the title "Members in
the Practice of Public Accounting" and I prefer
"Member in Public Practice." Otherwise I found the
topics and titles worked well.
Question 2 Question 2 Could this be made clear within the Introduction?
Question 2 Question 2 Does not like the way the rules and interpreations
are apart from each other. Recommends we place
1.500.001 as the first item in the 1.510 section and
place 1.500.002 as the first item in the 1.520 section.
Section 1.500 should only consist of the conceptual
framework for fees in general and not cover specific
fees.
Question 2 Question 2 Thinks it would be very helpful to folks in trying to
comply with the guidance if the guidance followed the
rule.
Question 2 Question 2 No concerns
Question 2 Question 2 I am just fine with the structure of the commisisn and
referral fee rule and the contingent fee rule.
Question 2 Question 2 This is consistent with prior code, although most
identify as an independence impairment, same with
gifts and entertainment
Question 2 Question 2 No, not really. Since the prohibited fees guidance on
Page 139 is followed by related interpretations on
Pages 140-144, all of the related content seems to be
easily accessible.
Question 2 Question 2 In reading this section (1.500) - it is confusing to the
reader to have the rules upfront and additional
related guidance after the rules. For example, it would
be better to group the contingent fee discussion
together. Then start a new section (1550.0001) for
Commissions and Referral Fees Rule.
Question 3 Question 3 Consider cross referencing to other sections where
fees are discussed - such as unbilled fees (ET
reference - ET 191.103-104)
Question 3 Question 3 Absolutely necessary to have this link. Especially so,
that the document is web based. Yes, I believe there
should be a cross reference to independence section,
as well. I would provide it directly after the title ( refer
to section on Independence for further appropriate
reference)
Question 3 Question 3 Believes the cross references would be useful.
Question 3 Question 3 I do think the way you have things here will serve to
be helpful reminders that other fee considerations
need to be addressed. Also, you asked whether a
similar cross-reference to fees subtopic under the
independence rule in the fees and other types of
renumeration would help, and I think it would be
helpful.
Question 3 Question 3 The Independence topic contains a subtopic on Fees.
Do you believe the interpretations 1.230.020 and
paragraph .04 of interpretation 1.230.010 are
necessary so that members do not overlook that
Contingent Fees and Commissions are addressed
under the Fees and Other Types of Remuneration
topic as opposed to the Independence topic? Yes.
Also, should there be a similar cross reference to the
Fees subtopic under the Independence rule in the
Fees and Other Types of Remuneration topic? Yes,
although it seems like it is already there (on Pages
139) and (85)? If so, please explain where you believe
such provision should appear.
Question 3 Question 3 I would keep the existing structure with Fees as a
subtopic of independence. Section 1.230 is
appropriate and consistent with the international
standards. Unpaid fees is appropriate here as is the
cross reference to guidance on comissions and
referral fees and contingent fees.
Question 3 Question 3 These sections are not necessary. Fees, as an abstract
concept meaning remuneration for services
performed, should not be tied to independence
because this creates the impression that fees can be
“too high” or that a CPA can earn “too much” in fees
from a particular client. The “Unpaid Fees” section,
dealing with “loans” resulting from unpaid fees being
carried on the CPA firm’s books too long, is a separate
issue unrelated to remuneration. Also, there should
not be a similar cross reference to the Fees subtopic
under the Independence rule in the Fees and Other
Types of Remuneration topic.
Question 3 Question 3 Again, this could be stressed within the Introduction
or a new subtopic discussing the areas where applied
Question 4 Question 4 Include an ethical conflicts interpretation for Part 3,
similar to Parts 1 and 2.
Question 4 Question 4 For consistency purposes, part 3 should contain an
Ethical Conflicts interpretation.
Question 4 Question 4 No thoughts
Question 4 Question 4 this cannot hurt
Question 4 Question 4 Yes, a member should adhere to all potential ethical
conflicts no matter their work status
Question 4 Question 4 Yes. It would seem that members who are not retired,
but unemployed or between jobs, should have the
same applicable structuring of the guidance for
consistency purposes as those members in public
practice and in business.
Question 4 Question 4 You asked whether Part 3 also contained this
interpretation and I am not sure that it is necessary in
that I really don't know what conflicts an unemployed
or retired member would encounter.
Question 5 Question 5 Yes, TIC believes the grandfathering provision should
be retained. Although it may be unlikely that
members will encounter this situation, TIC believes
those to whom it may be applicable should continue
to be grandfathered and should have ready access to
such guidance. Consistent with TIC’s point of view
that superseded guidance in old rulings and
interpretations should be updated rather than
deleted, TIC also believes that specific guidance
should not be deleted from the Code simply because
the occurrence of a fact pattern is unlikely. Retention
of the guidance would be convenient and practical for
members.
Question 5 Question 5 Grandfather provisions are problematic to State
Boards also within our regulations….It should be
properly noted since it could be applied….could a
“italicized link” be used or a footnote…(PEEC might
not be happy!)
Question 5 Question 5 No thoughts
Question 5 Question 5 since we are a litigious society, anything that clarifies
and defines legal limitation for members would be
helpful, even though it first appears to be
unwarranted, due to the aging of the original
grandfathering rules.
Question 5 Question 5 While some probably will disagree with my position
here, I think the answer is that we don't need the
grandfathering provisions any more in that, after all
these years, I just don't think the grandfathering
provisions would relate to anything encountered
often any more.
Question 5 Question 5 Believe that Grandfather clauses” are applicable only
to statutes, because in some sense all laws are the
result of compromise and contain one or more
arbitrary provisions not subject to rational
philosophical analysis. It thus makes sense if a new
law is passed to “grandfather” persons who were in
compliance with the old law and make the new
requirements applicable only to new persons not
previously subject to the law. For a private entity
such as the AICPA, grandfather clauses are not
rational because the AICPA ethics code should be
philosophically consistent and not contain arbitrary
exceptions to the general conceptual framework
underlying the Code. This is a reason why the
conceptual framework for independence should
supersede the interpretations, with the
interpretations used for guidance in certain situations.
Question 6 Question 6 These grandfathering provisions are still necessary
since firms do not know, and have no mechanism to
track, how many of these grandfathered loans are still
in existence.
Question 6 Question 6 Yes, TIC believes the grandfathering provision should
be retained. Although it may be unlikely that
members will encounter this situation, TIC believes
those to whom it may be applicable should continue
to be grandfathered and should have ready access to
such guidance. Consistent with TIC’s point of view
that superseded guidance in old rulings and
interpretations should be updated rather than
deleted, TIC also believes that specific guidance
should not be deleted from the Code simply because
the occurrence of a fact pattern is unlikely. Retention
of the guidance would be convenient and practical for
members.
Question 6 Question 6 Grandfather provisions are problematic to State
Boards also within our regulations….It should be
properly noted since it could be applied….could a
“italicized link” be used or a footnote…(PEEC might
not be happy!)
Question 6 Question 6 No thoughts
Question 6 Question 6 No, this is another example of why the conceptual
framework for independence should have precedence
over the Interpretations. The independence
interpretations are not logically consistent with the
conceptual framework for evaluating independence.
The independence interpretations are essentially
political "rules" whereas the logical and consistent
application of the conceptual framework in some
cases would lead to an interpretation different from
an "official" AICPA independence interpretation. The
current position is to apply the conceptual framework
unless there is an AICPA interpretation covering the
situation, and if so just follow the rule regardless of its
applicability to the particular situation between the
firm and the client. I would reverse the priority of the
conceptual framework and interpretations and note
that AICPA interpretations provide guidance in certain
situations but do not supersede the conceptual
framework unless a better, more rational result is
obtained by using the interpretations. I respect a
rational, objectively supported explanation for a
particular situation (i.e., "professional judgment")
more than the fact that at some time in the past a
majority of committee members voted in favor of a
particular rule.
Question 6 Question 6 Same anwer as question 5.
Question 6 Question 6 The issue relates to loans, but most of these loans will
have been refinanced or paid-off by now; if not,
members can refinance them, and it just, from an
appearance perspective, looks pretty bad for a
practitioner to have a loan from his/her client.
Essentially, while some will disagree, I would get rid of
the grandfathering provisions at this point.
Questions 5 & 6 Grandfatherin
g Provisions
IT is time to eliminate the grandfathering provisions
that go back to pre-2001. I think that practice has
changed sufficiently over the last decade that these
can go away.
Sugeest "sensitive professional judgments" be deleted since they don't know what it means.
Agree with placement for definitions, terms for conceptual framework application for independence