AICPA Provides Help With Troublesome GAO Rules | AccountingWEB

AICPA Provides Help With Troublesome GAO Rules

A Web site notice from the American Institute of CPAs (AICPA) on February 8, 2002 cautioned members about the auditor independence rules recently released by the General Accounting Office (GAO). The notice said the GAO’s rules impose tighter restrictions on nonaudit services than the current AICPA’s audit standards. It also said the GAO’s final rules have changed significantly from an earlier exposure draft, and it is concerned these rules might lead to confusion and compliance problems.

Fact Sheet and Comparison

To help minimize any confusion, the AICPA has prepared a fact sheet explaining the types of entities affected and nonaudit services restricted under the GAO’s new rules.

  • Affected entities. The affected entities range from federal, state and local governments to recipients of governmental grant and loan assistance, including colleges, universities, charitable organizations, and small businesses with SBA loans.
  • Types of nonaudit services. The prohibited nonaudit services include basic bookkeeping, human resource services, information technology services, and indirect cost proposal or cost allocation plans. Other nonaudit services, (e.g., payroll services, tax services, and appraisal or valuation services), are allowed subject to certain “overarching principles.” A separate document provides a side-by-side comparison of GAO’s rules with AICPA’s for each type of service.

Implementation Guidance

The AICPA is also compiling a list of issues and questions to be addressed in implementation guidance. In its member notice, AICPA said it feels strongly that implementation guidance is needed to help overcome: (1) A lack of clarity that might otherwise confuse preparers, auditors, and the public, and (2) Uncertainties involving interpretations that could impede uniform implementation of the rules and create compliance problems for both auditors and preparers of financial statements.

The notice, which was signed by AICPA Chairman James G. Castellano and President Barry C. Melancon, said the Institute had voiced its concerns to GAO. “We were relentless in our efforts and these efforts were significant and continuous, even up until the day before the rule’s release.”

GAO’s independence rules are effective for periods beginning on or after October 1, 2002. To submit an issue or question to AICPA for inclusion in the implementation guidance, send it to GAOIndependence@aicpa.org.

-Rosemary Schlank

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.