WASHINGTON — The staff of the Federal Trade Commission (FTC) will not object to a change in the professional code of conduct being proposed by a trade group representing accountants nationwide, which is designed to assure the public that audits by associated firms are conducted objectively.
In a letter sent to the American Institute of Certified Public Accountants (AICPA), the staff said it will not recommend taking action to block a proposed expansion of the group’s “independence rule.” The staff letter stated that the expanded independence rule appears likely to enable small and medium-sized accounting firms to increase their effective size and scope to compete for additional accounting work, while ensuring the public that their audit work is untainted by auditor self-interest.
The independence rule, which is in place to ensure that CPAs act “with objectivity and professional skepticism,” is part of the AICPA’s Code of Professional Conduct. The Institute proposes to amend the rule to apply not only to individual firms, but to networks of firms, as defined by the institute. Under the amended rule, a firm in a network would be precluded from providing audit services to a prospective client if other firms in that network were providing, or had provided, during the period covered by the audit, specified non-audit services to the prospective client that might be seen as potentially compromising the independence of the audit.