AICPA Adopts New Ethics Requirements for Members Who Outsource

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The American Institute of Certified Public Accountants (AICPA) has adopted new ethics rules that place new requirements on members who outsource work.

Two new rules and one revised rule spell out the responsibilities AICPA members now must meet when outsourcing clients' work to third-party providers. The definition of third-party service providers has been broadened beyond an outside tax service bureau to any third-party service provider used by AICPA members, including independent contractors used by a CPA firm.

The new requirements state that AICPA members must inform their clients – preferably in writing and before providing confidential client information to the third-party service provider – that the firm will use a third-party service provider when providing professional services to the client. The new rules also clarify that AICPA members are responsible for all work performed by the service provider.

Furthermore, AICPA members using third-party service providers are required under the new rules to enter into a contractual agreement with the third-party service provider to maintain the confidentiality of the client's information, and to be reasonably assured that the third-party service provider has appropriate procedures in place to prevent the unauthorized release of confidential client information. New rules are effective for all professional services performed on or after July 1, 2005, except for professional services performed pursuant to agreements in existence on June 30, 2005, that are completed by December 31, 2005.

Early application is encouraged.

New standards are available on the AICPA site.

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