AICPA ethics proposal would limit firms' loaning of staff to attest clients

By Ken Tysiac

The AICPA Professional Ethics Executive Committee (PEEC) is reproposing a new interpretation that would address independence requirements related to “staff augmentation” arrangements in which a CPA firm loans staff to a client.

The revised proposal marks a significant change in direction from the original proposal. The revised proposal, which would be added to the AICPA Code of Professional Conduct, indicates that a staff augmentation arrangement with an attest client would impair independence unless the following safeguards are in place:

  • The staff augmentation arrangement is being performed due to an unexpected situation that would create a significant hardship for the attest client to make other arrangements.
  • The augmented staff arrangement is not expected to reoccur.
  • The augmented staff arrangement is performed only for a short period. There is a rebuttable presumption that a short period would not exceed 30 days.
  • The augmented staff neither participates in, nor is in a position to influence, an attest engagement covering any period that includes the staff augmentation arrangement.
  • The augmented staff performs only activities that would not be prohibited by the “Nonattest Services” subtopic (ET §1.295) of the “Independence Rule” (ET §1.200.001).
  • The member is satisfied that client management designates an individual or individuals who possess suitable skill, knowledge, and/or experience, preferably within senior management, to be responsible for:

    • Determining the nature and scope of the activities to be provided by the augmented staff;
    • Supervising and overseeing the activities performed by the augmented staff; and
    • Evaluating the adequacy of the activities performed by the augmented staff and the findings resulting from the activities.

Accordingly, staff augmentation arrangements would generally be prohibited for an attest client except in very limited circumstances.

PEEC also is seeking comments on whether it is appropriate to permit an exemption that would potentially allow staff augmentation arrangements with certain affiliates of a financial statement attest client. The revised proposal also asks if an exception to the interpretation should be permitted for clients whose attest engagements with a firm are limited to engagements under the Statements on Standards for Attestation Engagements (SSAEs) that are not agreed-upon procedures (for example, a System and Organization Controls [SOC] for Cybersecurity engagement), provided the underlying services performed by the augmented staff do not relate to the specific subject matter of the SSAE engagement and the augmented staff does not perform any management responsibilities.

The proposal would take effect six months after notice is published in the Journal of Accountancy.

Comments will be accepted through Dec. 8 and can be emailed to

Ken Tysiac ( is the JofA’s editorial director.

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