New Ethics Interpretation adopted; two exposure drafts released.

The Professional Ethics Executive Committee recently adopted a new Ethics Interpretation [101-15--Financial Relationships], under Rule 101, Independence (AICPA, Professional Standards, vol. 2, ET sec. 101-01) which defines financial interest, direct financial interest and indirect financial interest as used in Ethics Interpretation 101-1 and provides guidance to members on determining whether financial interests should be considered direct or indirect financial interests. The PEEC did not adopt the Insurance Products example included in the exposure draft, as it decided the issue of mutual insurance companies required further study. The PEEC also plans to study loans, and as such, the new interpretation does not change the existing guidance dealing with loans. To view the interpretation, go to www.aicpa.org/download/ethics/interp101_1.pdf.

In additional actions, the PEEC issued an exposure draft that proposes a revision to Interpretation 101-1 under Rule 101, Independence, and also exposed for comment the "Conceptual Framework for AICPA Independence Standards." An omnibus exposure draft that proposes two new interpretations under Rule 101, Independence, was issued as well. The first proposal would provide guidance to members on the impact that certain indemnification and limitation of liability provisions may have on a member's independence when included in engagement letters or other agreements entered into with a client. The second proposal would provide guidance to members on the impact that the provision of litigation and forensic accounting services would have on a member's independence with respect to his or her attest clients. Both exposure drafts have comment deadlines of Dec. 16. Visit www.aicpa.org/members/div/ethics/index.htm for copies.

Additional information is available in this month's public accounting supplements (see page 2 for access instructions).