AICPA Ethics Committee Proposes Outsourcing Disclosure Rule

The Professional Ethics Executive Committee of the American Institute of Certified Public Accountants (AICPA) is proposing a rule that would require Institute members to disclose to their clients the outsourcing of professional services.

“The outsourcing of services has been a subject of serious debate by members of Congress, the media, and state and federal regulators,” said Susan Coffey, AICPA Vice-President – Self Regulation. “Our proposed rule would clarify the AICPA’s requirements for its members.”

The Professional Ethics Executive Committee convened a task force earlier this year to examine the issues surrounding the outsourcing of services.

The exposure draft proposes three new rulings in the Institute’s Code of Professional Conduct:

  • Under Rule 102, Integrity and Objectivity, a member would have to inform the client of the use of a third-party service provider prior to sharing confidential client information with that provider;
  • Under Rules 201, General Standards, and 202, Compliance With Standards, a member using a third-party provider is responsible for all work performed by the provider;
  • Under Rule 301, Confidential Client Information, a member who uses a third-party provider should enter into a contractual agreement with that provider to ensure the confidentiality of client records.

“Currently, it is the decision of our members whether they wish to inform their clients that services may be outsourced,” Coffey said. “However, the Institute’s long-standing policy with regard to outsourcing is that our members are ultimately responsible for the quality of any work performed by a third-party provider.”

The exposure draft, “Omnibus Proposal of Ethics Division Interpretations and Rulings”, is available for review.

AICPA members and other interested parties may submit comments until October 8, 2004.


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