Auditor standards proposed
The International Federation of Accountants is proposing changes in international auditor independence standards that could significantly impact U.S. CPAs. As an IFAC member, the AICPA routinely comments on the organization’s proposals and determines whether to revise its own Code of Professional Conduct to harmonize with international standards. IFAC’s exposure draft, issued on December 29, 2006, contains auditor independence standards more restrictive than those of the AICPA. To address this, the AICPA is inviting CPAs to provide comments.

The exposure draft’s more restrictive revisions reveal why input from U.S. CPAs is necessary. The draft extends the reach of IFAC’s independence rules — which currently govern only auditors of listed companies — to those who audit entities of significant public interest, such as large regulated financial institutions and possibly large pension funds and government agencies, as well as government-controlled and not-for-profit entities. Additionally, small firms that audit listed entities would no longer have flexibility and would be required to rotate partners on such engagements. Moreover, regardless of size, all firms would be required to rotate partners for audits of entities considered to be of significant public interest.
The AICPA is making every effort to ensure that IFAC’s final version is balanced and sensitive to the needs of smaller firms, but all CPAs should take part in the dialogue on these important independence issues. Comments should be sent to Lisa Snyder, Director of the AICPA’s Professional Ethics Division, at lsnyder@aicpa.org, for consideration by the Professional Ethics Executive Committee (PEEC) which will submit a comment letter to IFAC. The draft is at www.ifac.org/Guidance/EXD-Details.php?EDID=0075, and members should comment to the AICPA well before IFAC’s April 30, 2007 deadline.