IFAC issues proposal to revise independence standards; CPAs encouraged to comment.

On Dec. 29, 2006, the International Ethics Standards Board for Accountants, an independent standard-setting board within the International Federation of Accountants, released an exposure draft containing significant revisions to the independence standards of the IFAC Code of Ethics for Professional Accountants (the IFAC Code).

As a member body of IFAC, the AICPA considers all proposed revisions to the IFAC Code and determines what revisions, if any, may be appropriate to the AICPA Code of Professional Conduct to harmonize international standards. A number of revisions being proposed to the IFAC Code are more restrictive than those of the AICPA. Accordingly, they may have a significant impact on AICPA members if adopted by the Institute. AICPA members are encouraged to review this important proposal. Comments are due to IFAC by Apr. 30.

Significant revisions to the IFAC Code include:

* Extending the more restrictive listed entity independence requirements to the audits of entities of significant public interest. The proposal would extend the listed entity independence provisions (e.g., partner rotation, cooling-off period, non-audit services restrictions) to all entities of significant public interest. Such entities are described in the proposal as listed entities and certain other entities which, because of their business, size or number of employees, have a large number and wide range of stakeholders. While the proposal allows some flexibility for each member body to determine which entities should be considered to be entities of significant public interest for purposes of their particular jurisdiction, there is a presumption that regulated financial institutions would be entities of significant public interest, and depending on the facts and circumstances, such entities...