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The Ethics and Strategic Professional Issues Committee Kent J. Bailey, CPA - Presenter 2010 NASBA Regional Meetings. Proposed Uniform Approach to Independence. Submitted by: The Ethics and Strategic Professional Issues Committee Gaylen R. Hansen, CPA, Chair

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Proposed Uniform Approach to Independence

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Proposed uniform approach to independence

The Ethics and Strategic Professional Issues Committee

Kent J. Bailey, CPA - Presenter

2010 NASBA Regional Meetings

Proposed Uniform Approach to Independence


Proposed uniform definition of independence

Submitted by:

The Ethics and Strategic Professional Issues Committee

Gaylen R. Hansen, CPA, Chair

Kent J. Bailey, CPA, Subcommittee Chair

Steven Corbeille

Andrew L. DuBoff, CPA

Gary Fleming, CPA

Wayne Michael Fritz, CPA

Patrick D. McCarthy, CPA

Marianne Mickelson, Ed. D.

Carla E. Sledge, CPA

Cecil Wood, Ph.D

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence1

Definitions for Independence

U.S. Securities and Exchange Commission (SEC)

U.S. Department of Labor (DOL)

Government Accountability Office (GAO)

Public Company Accounting Oversight Board (PCAOB)

International Federation of Accountants (IFAC)

American Institute of CPA's (AICPA)

State Boards

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence2

How does your State Board define “independence” for a Licensee

and/or a firm?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence3

Survey Results

23 states define independence indicating a firm/licensee is not independent if certain conditions prevail

15 states reference the AICPA as of a date

4 use their own unique definition

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence4

Where can the public find your

definition of independence?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence5

Code of Professional Conduct

State Statutes

Administrative Rules

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence6

As a regulator of the Accountancy Profession what is your opinion of state statutes or regulations that refer to the standards of the AICPA?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence7

In dealing with licensee independence how specific do you believe each state's rules/regulations should be?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence8

Do you think the time has come to attempt to convince all 55 jurisdictions to adopt a uniform definition of independence?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence9

Independence of Mind

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.

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence10

Independence in Appearance

The avoidance of facts and circumstances that would cause an informed third party, having knowledge of all relevant information to reasonably conclude that the integrity, objectivity or professional skepticism of a firm or an attest engagement team member had been compromised.

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence11

A licensee engaged in the practice of public accountancy shall:

  • Conform in mind and appearance to the independence standards adopted by the Board, and/or, where applicable, the :

    • U.S. Securities and Exchange Commission (SEC),

    • Government Accountability Office (GAO),

    • Public Company Accounting Oversight Board (PCAOB), and

    • Other national or international regulatory or professional standard setting bodies.

    • The application of any such standard to a firm or licensee's conduct shall be based on the requirements of the standard as of the date of the conduct being evaluated.

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence12

Recommendations

We recommend NASBA forward the following uniform definition of independence to the NASBA UAA Committee for consideration.

We recommend NASBA continue to work with other regulatory and private sector, standard-setting bodies to promote uniform independence standards.

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence13

After you have reviewed the proposed uniform definition of independence are there changes or clarification that need

to be made?

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


Proposed uniform definition of independence14

THANK YOU

PROPOSED UNIFORM DEFINITION OF INDEPENDENCE


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