Independence and Ethics Developments Audit Risk Alert

This Audit Risk Alert informs you of recent developments in the area of independence and ethics for accountants-an area receiving continued and increased attention from regulators, investors, the news media, and others. Moreover, this alert helps you understand your independence and ethics requirements under the AICPA Code of Professional Conduct and, if applicable, certain other rule-making and standard setting bodies. The alert includes a plain-English digest of the AICPA Independence Rules.

This alert includes not only recent developments related to AICPA independence and ethics rules, but also independence and ethics developments from the SEC, PCAOB, GAO, DOL, IESBA and IFAC. The alert includes information on recently issued independence and ethics developments including the following:

• AICPA Ethics Interpretation No. 501-8, "Failure to Follow Requirements of Governmental Bodies, Commissions, or Other Regulatory Agencies on Indemnification and Limitation of Liability Provisions in Connection with Audit and Other Attest Services"
• AICPA Ethics Ruling No. 94, "Indemnification Clause in Engagement Letters" and Ethics Ruling No. 102, "Indemnification of a Client"
• AICPA FAQ on the independence impact of providing FASB Statement No. 141 (revised 2007) services to an attest client
• Recognition by the AICPA Council of the IASB as an accounting standard setter
• SEC Rule 2-01, Qualifications of Accountants, of Regulation S-X
• PCAOB independence and ethics rules and common deficiencies observed by PCAOB inspectors

You will also find information on emerging independence and ethics issues, including the following:

• Networks and network firms
• PEEC's Proposed Framework for Meeting the Objectives of the Fundamental Principles
• XBRL and IFRS nonattest services
• Independence rules pertaining to employee benefit plan audits
• IFAC
• IESBA

This publication is designed to provide illustrative information with respect to the subject matter covered. It does not establish standards or preferred practices. This document has not been considered or acted upon by senior technical committees of the AICPA or the AICPA Board of Directors.

Content refers to previous edition

Notice to Readers

This publication is designed to provide illustrative information with respect to the subject matter covered. It does not establish standards or preferred practices. The material has not been considered or acted upon by senior technical committees or the AICPA Board of Directors and does not represent an official opinion or position of the AICPA. It is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. The author and publisher make no representations,warranties, or guarantees as to and assume no responsibility for the content or application of the material contained herein and expressly disclaim all liability for any damages arising out of the use of, reference to, or reliance on such material.

Written by Catherine Allen, CPA
Edited by Christopher Cole, CPA, CFE
Accounting and Auditing Publications

Acknowledgments
The AICPA staff is grateful to Lisa Snyder, CPA, and Ellen Goria, AICPA Professional Ethics Division, for their significant and valuable contributions to the development of this alert.
Our special thanks to Catherine Allen who developed and wrote this alert.

022478