Statements of Position

Files

Download

Download Full Text (304 KB)

Description

The Professional Ethics Executive Committee recently considered existing pronouncements on independence in the AlCPA's Code of Conduct regarding loans to members from clients. The ethics committee concluded that in the circumstances of today's practice environment these pronouncements permitted financial relationships between the member and the client that could impair the appearance of independence. Accordingly, the ethics committee proposes a revision of the existing pronouncements that, in effect, will prohibit a member or a member's firm from having a loan to or from a client. However, the following loans will be grandfathered under the proposed revision: fully secured mortgage loans (including a home equity loan) on a primary residence obtained under normal lending procedures, terms, and requirements prior to (a) the effective date of this proposed revision, or (b) the date on which the borrower is subject to the independence rules with respect to the holder of the loan. All other loans must be disposed of within twelve months of the later of (a) the effective date of this proposed revision, (b) the date on which the borrower is subject to the independence rules with respect to the holder of the loan, or (c) the date on which a member becomes aware that a client acquired all or part of the loan. If this proposed revision is adopted, the ethics committee intends to issue ethics rulings on two related issues. The rulings will permit (a) the use of a credit card from a financial institution client (including a retailer that extends credit to the general public) as long as the balance is paid in full upon receipt of a statement, and (b) a borrowing of cash value under terms of an insurance policy. Such activities are not considered to be loans as defined in Interpretation 101-5, "The Meaning of Certain Terminology Used in Interpretation 101-1.A.4" (AICPA, Professional Standards, vol. 2, ET sec. 101.07).

ISBN

ed91-07-09t

Publication Date

1991

Relational Format

Book

Keywords

Business ethics -- United States; Accountants -- Professional Ethics-- Standards-- United States

Disciplines

Accounting | Taxation

Comments

Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants; Exposure draft (American Institute of Certified Public Accountants), 1991, July 9

Proposed revision of ethics interpretations 101-1.A.4 and 101-5 : regarding loans to and from clients for whom services are performed requiring independence;Regarding loans to and from clients for whom services are performed requiring independence

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.