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Notice of the Ethics Committee

Steven J. Leifer, CPA
Published Date:
Apr 30, 2015
The AICPA has adopted “Breach of an Independence Interpretation” (1.298.010), which assists members and members’ firms in addressing a breach of the independence rules. This new interpretation of the Code of Professional Conduct sets forth how an identified breach should be communicated within the firm and how the responsible individual in the firm should evaluate whether the breach can be satisfactorily addressed, or whether an attest engagement should be terminated. The Interpretation notes the following:

• Those charged with governance at an attest client must be informed of the breach and of the firm’s determination as to the required action to be taken. These communications should be in writing. 

• The responsible individual at the firm should document the breach, the matters discussed with those charged with governance and the actions taken, as well as any discussions with a professional body, regulator or oversight authority.

• In order to address the consequences of an independence breach pursuant to this Interpretation, a member or the member’s firm must be compliant with QC Section 10, “A Firm’s System of Quality Control” (Redrafted) (AICPA, Professional Standards).

The Interpretation cautions that a determination that a breach has been satisfactorily addressed will not preclude an investigation or enforcement action.  The member or the member’s firm should be prepared to justify such a determination.

The Interpretation is effective March 31, 2016, with early implementation allowed.

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