Nonattest Services for Attest Clients—Maintaining Independence

Source: Pennsylvania CPA Journal

This article discusses Ethics Interpretation 101-3, Performance of Nonattest Services under Rule 101, Independence.

Under this new rule, CPAs who perform nonattest services for attest clients must comply with the following:

• They may not participate in management or make management decisions.
• They must require the client to appoint a person to maintain oversight of the engagement. This person must have appropriate skills for the purpose, and must evaluate and accept responsibility for the results of the engagement.
• They must prepare a document setting forth a mutual understanding of the objectives and nature of the services, the CPA’s responsibilities, the client’s responsibilities, and any engagement limitations.

An example of a service that exposes the CPA to risk of nonindependence is bookkeeping. Bookkeeping services should be performed for attest clients only if, among other things, the client approves classification of entries and provides documentation for journal entries.

CPAs may design and install systems on behalf of attest clients and train the client’s employees in using it, but they cannot provide regular supervision of the employees.

For the complete article, click here and select “Preserving Independence for Those Providing Attest Services” in the Summer 2008 issue.

From Pennsylvania CPA Journal, http://www.picpa.org/, Summer 2008.

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