Ethics

October 1, 2009

The AICPA Professional Ethics Executive Committee (PEEC) released exposure drafts of revisions to guidance regarding the AICPA Code of Professional Conduct (the Code). The EDs make clarifying revisions to an ethics ruling under Rule 301, Confidential Client Information, and to two interpretations and one ethics ruling under Rule 101, Independence.

 

The proposed revisions to the ethics ruling under Rule 301 indicate that if client information that is not in the public domain or available to the public, such as statistical information and other data, is shared with a third-party on a “no-name” basis for research or benchmarking purposes, it would be considered a breach of confidentiality unless the member received the client’s consent. To provide further clarification into what information would be considered confidential client information, the PEEC is proposing a new definition to section 92 of the Code.

 

Proposed revisions to the “Application of the Independence Rules to Covered Members Formerly Employed by a Client or Otherwise Associated with a Client” section of Interpretation 101-1 are intended to make clear that individuals on the attest engagement and individuals in a position to influence the attest engagement that were formerly employed by or associated with a client also need to disassociate from the client.

 

Revisions to the “Application of the Independence Rules to a Covered Member’s Immediate Family” section of Interpretation 101-1 would ease restrictions on participation of immediate family members in client-sponsored employee benefit plans.

 

Current guidance permits, with safeguards, immediate family members of only certain covered members to participate in a retirement, savings, compensation or similar plan that is a client, is sponsored by a client or that invests in a client, whereas all immediate family members in permitted employment positions are allowed, with safeguards, to participate in client-sponsored health and welfare plans.

 

After studying various employee benefit plans, the PEEC concluded that, provided certain safeguards are in place, all immediate family members should be allowed to participate in all employee benefit plans with the exception of certain share-based compensation arrangements or nonqualified deferred compensation plans.

 

The ED also calls for revisions to related guidance including Ethics Ruling no. 107, Participation in Health and Welfare Plan Sponsored by Client (under Rule 101), and the “Retirement, Savings, Compensation, or Similar Plans” section of Interpretation 101-15, Financial Relationships.

 

The EDs are available at tinyurl.com/l2wqhb.

 

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