AICPA sets ethical standards for outsourcing.

The Institute adopted three ethics rules--two new and one revised--that spell out the responsibilities AICPA members now must meet when outsourcing clients' work to third-party, providers (www.aicpa.org/download/ethics/2004_1028_outsourcing.pdf).

As part of the changes, the definition of third-party service providers has been broadened to include not only outside tax-service bureaus but any third-party service providers--including independent contractors--used by Institute members. Further, members must inform their clients--preferably in writing and before providing confidential client information to any third-party service provider--that they will engage such help to provide professional services. The new rules also specify that members are responsible for all work performed by such service providers and must contractually agree with each of them to maintain the confidentiality of client information and obtain reasonable assurance that each uses appropriate procedures to ensure such security. The rules are effective for all professional services performed on or after July 1, 2005, except for those rendered under agreements in existence on June 30, 2005, and completed by December 31, 2005. Early application is encouraged.