·         Rule 101, Independence

        ·        Rule 203, Accounting Principles

An understanding and appreciation of the importance of all rules contained in the Code will assist practitioners in their efforts to provide opinions that are relevant, and that assist the trier of fact.

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Principles of Professional Conduct

The Preamble and Articles I through VI of the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct provide general guidance on professional responsibilities, the public interest, integrity, objectivity and independence, due care, and the scope and nature of services without establishing specific standards. Nevertheless, they should be read by every practitioner. An understanding of the difference between independence and objectivity is important particularly when consulting services are being provided to attest service clients. The AICPA standards for independence relate only to the performance of attestation services. The standards for objectivity apply to all services. It is important, however, that the practitioner adhere to all the rules that are appropriate for the particular service being provided.

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Independence

Interpretation 101-3 of the Code provides guidance to auditors when their firms provide nonattest services to the attest client.  This Interpretation was revised in 2003.

The July/August 2003 issue of the Practicing CPA included an article titled, "Auditor Independence Rules Impact Business Valuation and Litigation Services".

The March/April 2004 issue of the AICPA E-Valuation Alert revisited Interpretation 101-3 and its effect on Business Valuation services. 

View guidance on understanding and implementing Rule 101-3,  Independence and Non-Attest Services.

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General Standards

Practitioners of consulting services who are members of the AICPA are subject to the Code of Professional Conduct. Rule 201 of the Code sets forth four general standards for all professional services. These standards are repeated in the Statement on Standards for Consulting Services (SSCS) as four of the seven consulting services standards. The authority to issue standards for consulting services is derived from the Code. Members need to review the Code to determine the behavioral standards that apply to consulting services.

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Integrity and Objectivity

Rule 102 and Interpretation 102-2 of the Code are important to a consulting services practice. Interpretation 102-2, dealing with conflicts of interest, is referred to in the SSCS. Among other things, integrity requires a member to be honest and candid within the constraints of client confidentiality. Objectivity is a state of mind, a quality that lends value to a member's services. It is the distinguishing feature of the profession.

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Confidential Client Information

Rule 301 of the Code of Professional Conduct is particularly applicable when consulting services are provided to a client. The rule is that a practitioner will not disclose any confidential client information without the specific consent of the client.

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Contingent Fees, Commissions, and Referral Fees

The recently revised Rule 302 on contingent fees and Rule 503 on commissions and referral fees are significant for consulting services because they do not restrict the acceptance of such compensation when providing consulting services for non-attest clients. Under certain circumstances, these types of practitioner fee arrangements are permissible. One requirement is that commissions and referral fees be disclosed to the client. Practitioners who choose to accept fees and commissions as defined in these rules should be aware that state or other regulatory bodies may not permit such practices.

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