Aggressive tax transactions also include transactions the accounting firm recommends indirectly, as when a firm affiliate or subsidiary makes the recommendation to the client. Before I ask my fellow Board members for their comments, I want to thank Tom Ray, Greg Scates, Bella Rivshin, and other staff involved for their hard work in developing the proposals that we are considering today. The one allowable exception is for noncontingent fees set by a public authority acting in the public interest. No other aspect of the Board's rules on independence and tax services is affected by this extension. The Board may, in its discretion, establish ad hoc task forces.
Auditor Independence A registered public accounting firm and its associated persons must be independent of the firm's audit client throughout the audit and professional engagement period. The state of mind that permits the performance of an attest service without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism. Note: In the rare circumstances in which the auditor believes the objectives of the standard can be met by alternative means, the auditor, as part of documenting the planning and performance of the work, must document the information that demonstrates that the objectives were achieved. The rules were designed to address certain concerns related to auditor independence when auditors sell personal tax services to individuals who play a direct role in preparing the financial statements of public company audit clients or market or otherwise opine in favor of aggressive tax shelter schemes. Find sources: — · · · · August 2008 Public Company Accounting Oversight Board Agency overview Formed 2002 ; 17 years ago 2002 Headquarters , U. Place the accountant in the position of auditing his or her own work; 3.
§ 80a-3 c that has an investment adviser or sponsor included in this definition by either paragraph i or ii of this definition. A fee paid by anyone other than the client is an indirect fee. Conduct brief, focused information sessions to help professionals learn the new policies and procedures and understand their specific roles in complying with them. Applies to fee arrangements made between the audit client or its affiliates and the firm or its affiliates during the audit and professional engagement period. Concurrent with issuing the proposed rule and rule amendment, the Board also adopted a rule amendment to further delay the implementation of Rule 3523 to apply to tax services provided on or before April 30, 2008 when those services are provided during the audit period and are completed Start Printed Page 50845before the professional engagement period begins.
Rule 3526, as adopted by the Board, excludes the italicized words. Tax Transactions A registered public accounting firm is not independent of its audit client if the firm, or any affiliate of the firm, during the audit and professional engagement period, provides any non-audit service to the audit client related to marketing, planning, or opining in favor of the tax treatment of, a transaction - a Confidential Transactions - that is a confidential transaction; or b Aggressive Tax Position Transactions - that was initially recommended, directly or indirectly, by the registered public accounting firm and a significant purpose of which is tax avoidance, unless the proposed tax treatment is at least more likely than not to be allowable under applicable tax laws. A transaction is treated as confidential even if the conditions of confidentiality are not legally binding on the taxpayer. An engagement is in process if the engagement letter is fully executed and substantive work has begun. Goodman 202-955-8653, or Michael J. The organization has a staff of about 800 and offices in 11 states in addition to its headquarters in Washington. My colleagues and I on the Board welcome public comment on this proposed amendment.
They also sought to exclude relationships that were completed before the audit period or the professional engagement period and had ongoing effects on the company, but that arguably did not bear on independence. For this reason, I support the staff's proposal and encourage public comment on it. Discuss the proposal and the potential impact on independence and ethics with the audit committee. In addition, the Board did not require auditors to affirm their independence - i. Rule 3523 continues to apply to tax services provided during the professional engagement period. All comments received will be posted without change; we do not edit personal identifying information from submissions. It allows the auditor to provide tax services to such individuals where the engagement was in existence prior to the hiring or promotion and the services are completed within 180 days after the individual is hired or promoted.
Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule is consistent with the requirements of Title I of the Act. Board's Statement on Burden on Competition The Board does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. For example, an auditor may be forced to defend its previous opinion that the transaction met the appropriate standard or the client may sue the audit firm. But these challenges must be met to protect the public interest and maintain stakeholder confidence in corporate financial reporting. Examiners should also review external audit engagement letters to determine whether they include any limitation of liability provisions of the types that are deemed unsafe and unsound by the Interagency Advisory.
The Commission is publishing this notice to solicit comments on the proposed rule from interested persons. These Interim Independence Standards also include Standards Nos. Note 2: Rule 3520 applies only to those associated persons of a registered public accounting firm required to be independent of the firm's audit client by standards, rules or regulations of the Board or Commission or other applicable independence criteria. Only noncontingent fee arrangements set by public authorities acting in the public interest are allowed. Firms can achieve these important objectives by carefully considering the rules and how they affect their practices and by adopting policies and procedures to implement the rules in the most effective manner. These fees include consideration in whatever form paid, whether in cash or in kind, for services to analyze the transaction whether or not related to the tax consequences of the transaction , for services to implement the transaction, for services to document the transaction, and for services to prepare tax returns to the extent that the fees exceed the fees customary for return preparation. Expert services unrelated to the audit.
How and whether the auditor implements these matters in the audit will depend on the exercise of professional judgment in the circumstances consistent with the objectives of the standard. Part 1 - General Requirements Rule 3100. The rule prohibits both direct and indirect fee arrangements. On June 28, 2010, in a five-justice majority opinion written by , the Supreme Court found the appointment provisions of the Act to be constitutional, but struck down the for-cause removal provision. During those periods, nominations may be submitted by any person or organization, including, but not limited to, any investor, any accounting firm, any issuer, broker, dealer, and any institution of higher learning. He was a prominent lawyer and former director of both the and.