A Peek at PEEC(AICPA Professional Ethics Executive Cmte)<br />2011 Regional Meetings<br />June 10 – Omaha, NE<br />June 24...
Wes Williams, PEEC Chair<br />Lisa Snyder, Director of AICPA Ethics Division<br />Gaylen Hansen, Moderator and Member of P...
Discussion Topics <br />Network Firms in Practice<br />CPA Firm Name Issues<br />On the Drawing Board<br />Client Records<...
Network Firm CriteriaET 101-17<br />If a firm “cooperates” as part of an association, and <br />Shares at least one of the...
UAA Exposure DraftCPA Firm Names<br />Network is an association of at least 2 or more entities that: <br /><ul><li>Coopera...
Shares one or more of the following: </li></ul>Use of a common brand name<br />Common control<br />Profits or costs<br />C...
UAA Exposure DraftCPA Firm Names<br />Firm names that are not considered misleading includes<br />Use of a common brand na...
A non-CPA owner in name if CPA title is not used </li></ul>6<br />
UAA Exposure DraftCPA Firm Names<br />Firm names that are considered misleading includes –<br />Individual in name who is ...
Any representation that would likely cause a reasonable person to have a false/unjustified expectation of favorable result...
Retention of Client RecordsET 501-1<br />Recent editorial revision of “client records”<br />Client provided records are ac...
Definition: Member in Business & IndustryET 92<br />A member employed or engaged on a contractual basis or volunteer basis...
Confidential Employment Information ET 501-9<br />Applies to all members/CPAs<br />Covers confidential information of curr...
Act discreditable if used without employer consent unless legal or professional responsibility exists</li></ul>Not intende...
Confidential Employment Information ET 501-9<br />Exceptions for disclosure<br />Complaints with disciplinary or regulator...
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A Peek at PEEC - Gaylen Hansen, Lisa Snyder, Wes Williams - Friday - Regionals 2011

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  • How does adoption of Interpretation 101-17 affect firms? [I believe Wes asked to make some introductory remarks on this as to practical experience preparing for the standard]What does a common brand name mean? [Iowa State UAA Comment]Can you discuss/clarify for us the difference between an association and a network firm? [N. Carolina UAA Comment]Would a firm be considered part of a network if it belongs to an association and includes the association’s name as only part of its firm name? Would a firm be considered part of a network if it belongs to an association and includes reference to its membership in the association on its stationery and promotional materials?Hypothethical:A CPA firm joins an association and is considered to be a network firm because one or more of the six characteristics of a network exists. Would a separate bookkeeping or consulting company owned by the CPA firm also be considered a network firm?What interests and relationships is a network firm prohibited from having with the attest clients of other network firms?How would the provision of nonattest services to a financial statement audit or review client of a network firm impact independence? Does the interpretation impact compilations or other attestation engagements, valuation, SAS 70, etc?
  • How does the UAA proposed definition of network firms compare to ET 101-17? Are there differences?
  • What about fictitious names – didn’t is that currently a prohibition in the UAA?
  • This is the #1 area of complaints that state boards get.Where is the PEEC task Force going with this do you think it will make a difference? Why not just adopt the UAA guidance into the AICPA Code of Conduct and sync up the two documents?Gaylen will make a comment on the very last bullet related to Colorado new rules that clarify that the CPAs “owns” its reports not the client.
  • Alan Steiger (Oregon) is Task Force Chair.Why all this sudden emphasis on CPAs in Business &amp; Industry? Is it needed?Can we have dual lives? Can a CPA be in public practice and B&amp;I at the same time? What about the reverse?
  • This is a case where a standard applies to all CPAs – and restricts what proprietary information a CPA can use. What does proprietary information mean?
  • Here are some exceptions – why are they needed? [Balance the public interest between confidentiality and transparency]
  • Do you think this might help boards in its consideration of “holding out”?
  • A Peek at PEEC - Gaylen Hansen, Lisa Snyder, Wes Williams - Friday - Regionals 2011

    1. 1. A Peek at PEEC(AICPA Professional Ethics Executive Cmte)<br />2011 Regional Meetings<br />June 10 – Omaha, NE<br />June 24 – Point Clear, AL<br />1<br />
    2. 2. Wes Williams, PEEC Chair<br />Lisa Snyder, Director of AICPA Ethics Division<br />Gaylen Hansen, Moderator and Member of PEEC<br />2<br />Panel Discussion<br />
    3. 3. Discussion Topics <br />Network Firms in Practice<br />CPA Firm Name Issues<br />On the Drawing Board<br />Client Records<br />Business & Industry<br />3<br />
    4. 4. Network Firm CriteriaET 101-17<br />If a firm “cooperates” as part of an association, and <br />Shares at least one of the following with other firms<br />Common brand name<br />Common control<br />Profits or costs<br />Common business strategy<br />Significant professional resources<br />Common QC policies & procedures<br />4<br />If one or more criteria are met, the firm is considered a “network firm” and needs to be independent of F/S audit and review clients of other network firms in the network. <br />
    5. 5. UAA Exposure DraftCPA Firm Names<br />Network is an association of at least 2 or more entities that: <br /><ul><li>Cooperates pursuant to agreement for purpose of enhancing capabilities to provide professional services, and;
    6. 6. Shares one or more of the following: </li></ul>Use of a common brand name<br />Common control<br />Profits or costs<br />Common business strategy<br />Significant part of professional resources<br />Common quality control policies and procedures<br />5<br />A “Network Firm” is a CPA firm that is part of a Network as defined above. UAA definition is the same as AICPA / ET 101-17 definition.<br />
    7. 7. UAA Exposure DraftCPA Firm Names<br />Firm names that are not considered misleading includes<br />Use of a common brand name as part offirm name if firm is a “Network Firm” as defined <br />Network Name as the firm name, provided it is a Network Firm and shares one or more of other characteristics in network definition (i.e., other than common brand name)<br /><ul><li>Use of CPA title when all named individuals are CPAs and are owners or former owners
    8. 8. A non-CPA owner in name if CPA title is not used </li></ul>6<br />
    9. 9. UAA Exposure DraftCPA Firm Names<br />Firm names that are considered misleading includes –<br />Individual in name who is not a CPA if “CPAs” is used<br />Indicating association with persons who are not members of firm (except as permitted under Network Firm provision)<br />Use of “& Company” or “& Associate” if firm does have, in addition to named partner/owner at least one other unnamed partner/owner or employee<br /><ul><li>Name of an owner whose license is revoked for disciplinary reasons by State Board
    10. 10. Any representation that would likely cause a reasonable person to have a false/unjustified expectation of favorable results or capabilities </li></ul>7<br />
    11. 11. Retention of Client RecordsET 501-1<br />Recent editorial revision of “client records”<br />Client provided records are accounting or other records belonging to client provided by or on behalf of the client,including reproductions of such records<br />Task Force recommending<br />Highlight state boards’ more restrictive rules on unpaid fees<br />Guidance on how to treat electronic records<br />Guidance on “CPA work product” (e.g., accountant’s reports)<br />8<br />
    12. 12. Definition: Member in Business & IndustryET 92<br />A member employed or engaged on a contractual basis or volunteer basis in an executive, staff, or administrative capacity in such areas as industry, the public sector, education, the not-for-profit sector, regulatory bodies, or professional bodies. This does not include members while engaged in the practice of public accounting.<br />Allows for the fact that CPA in public practice may simultaneously also be a engaged in B&I (e.g., serve as a volunteer board member)<br />
    13. 13. Confidential Employment Information ET 501-9<br />Applies to all members/CPAs<br />Covers confidential information of current or prior employer (includes volunteer activities)<br /><ul><li>Proprietary information outside public domain and obtained as result of employment relationship
    14. 14. Act discreditable if used without employer consent unless legal or professional responsibility exists</li></ul>Not intended to prohibit member from using expertise gained through prior employment relationships.<br />
    15. 15. Confidential Employment Information ET 501-9<br />Exceptions for disclosure<br />Complaints with disciplinary or regulatory body<br />Protect interests in legal proceedings<br />Report concerns on employer’s confidential complaint hotline or to those charged with governance<br />Obtain financing with lenders; deal with vendors, clients, customers, etc. on behalf of employer<br />
    16. 16. Financial interestsET 501-10<br />Threats to integrity and objectivity of CPA in B&I or their immediate/close family member’s financial interest in or other relationship with employer, e.g.<br />A financial interest in employer and value directly affected by decisions of CPA<br />Eligibility for profit/performance-related bonus and value directly affected by decisions of CPA<br />Qualifying for share options if certain targets are achieved<br />Does not prohibit CPAs in B&I from having financial interests in employer.<br />
    17. 17. Financial interestsET 501-10<br />Significance of threat should be evaluated and safeguards applied, when appropriate and reasonable, to eliminate threat or reduce it to an acceptable level<br />Examples of safeguards include: <br />Consultation with relevant professional bodies<br />Up-to-date education on ethical issues and legal restrictions<br />In evaluating significance of threat, nature and significance of financial interest should be evaluated.<br />
    18. 18. Financial interestsET 501-10<br />Examples of safeguards include (cont’d): <br />Policies and procedures for committee independent of CPA to determine level or form of remuneration<br />Consultation with superiors / those charged with governance<br />Disclosure of relevant interests and plans to trade shares<br />Internal and external audit procedures<br />Current knowledge of regulations, e.g., insider trading<br />In evaluating significance of threat, nature and significance of financial interest should be evaluated.<br />
    19. 19. Deceptive Acts in Promoting or Marketing ET 501-11<br />If CPA in B&I promotes/markets abilities to provide professional services or makes claims about experience or qualifications in false, misleading, or deceptive manner = Act Discreditable <br />Includes claims/representations that would cause a reasonable person to misunderstand/be deceived<br />Includes representation about CPA licensure or other professional certification or accreditation<br />15<br />

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