Tightened Ethics Requirements

The AICPA has adopted a new standard that tightens ethics requirements for its members. Failure to comply with a regulator's requirements on the use of indemnification and limitation of liability provisions will be considered an act discreditable to the profession.

Regulators like the SEC, state insurance commissions and federal banking agencies presently prohibit organizations under their jurisdiction from entering into certain types of indemnification and limitation of liability provisions in agreements for the performance of audit or other attest services. A new interpretation by the AICPA's Professional Ethics Executive Committee (PEEC) prohibits members from using such provisions when contracting for audit and other attest services when their employer or client is subject to the requirements of one of these regulators.

The PEEC's standard, effective July 31, 2008, may be found at www.aicpa. org/download/ethics/ editedadopted_501_8_ final.pdf.