AICPA to Release Proposed Revisions to Ethics Rules

You should be aware that the AICPA Professional Ethics Executive Committee (PEEC) is about to release exposure drafts of revisions to guidance regarding the AICPA Code of Professional Conduct (the Code). The exposure drafts will be released in August for a 60-day comment period. The expoure drafts are designed to make clarifying revisions to:

• An ethics ruling under Rule 301, "Confidential Client Information,"
• Two interpretations and one ethics ruling under Rule 101—Independence.
• Revisions to related guidance including Ethics Ruling no. 107, "Participation in Health and Welfare Plan Sponsored by Client" (under Rule 101) and the “Retirement, Savings, Compensation, or Similar Plans” section of Interpretation 101-15 "Financial Relationships."

Rule 301

The proposed revisions to the ethics ruling under Rule 301:

If client information that is not in the public domain or available to the public, such as statistical information and other data, is shared with a third-party on a “no-name” basis for research or benchmarking purposes, it would be considered a breach of confidentiality unless the member received the client’s consent.

The Committee is proposing a new definition to ET Section 92, "Definitions" that would provide further clarification into what information would be considered confidential client information.

Interpretation 101-1

Proposed revisions to the “Application of the Independence Rules to Covered Members Formerly Employed by a Client or Otherwise Associated with a Client” section of Interpretation 101-1:

• Are intended to make clear that both individuals on the attest engagement and individuals in a position to influence the attest engagement that were formerly employed by or associated with a client also need to disassociate from the client.
• Would ease restrictions on participation of immediate family members in client sponsored employee benefit plans.

Current guidance permits, with safeguards, immediate family members of only certain covered members to participate in a retirement, savings, compensation, or similar plan that is a client, is sponsored by a client or that invests in a client, whereas all immediate family members in permitted employment positions are allowed, with safeguards, to participate in client sponsored health and welfare plans.

The revision would allow all immediate family members to participate in all employee benefit plans with the exception of certain share-based compensation arrangements or nonqualified deferred compensations plans, provided certain safeguards are in place.

Other Revisions

The ED also calls for revisions to related guidance including Ethics Ruling no. 107, "Participation in Health and Welfare Plan Sponsored by Client" (under Rule 101) and the “Retirement, Savings, Compensation, or Similar Plans” section of Interpretation 101-15, "Financial Relationships."

We will bring you more details when the Committee releases the exposure drafts.

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