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    Rules Regarding CPA Independence in Public vs. Private Companies

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    One think I notice is that section 100 of the Rules of the Code of Conduct discusses independence, objectivity, and integrity. The independence rule does not apply to all services performed by the CPA. The independence rule applies to auditing as well as other attestation services such as examinations, reviews, and agreed-upon procedures. For example, if a partner in a firm has a direct or material indirect financial investment and practices in the office performing the attest engagement, the firm is not considered independent. If a professional employee has a direct or material indirect financial investment and does NOT serve on the attest engagement, the firm may be independent. There are a few exception to this. If the employee is considered a "covered member" as specified in the code, he will not retain independence.

    How do rules for public companies differ from nonpublic companies with respect to independence?

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    Solution Preview

    This question is slightly misleading. The AICPA Code of Professional Conduct, which includes Section 100, applies to all accountants in public practice regardless if the company is a public or private company.

    As the AICPA states, "The AICPA Code of Professional Conduct (the code) begins with this preface, which applies to all members." (reference at this link - ...

    Solution Summary

    This solution briefly discusses the rules for CPA independence and how those rules differ as dictated by the AICPA in the AICPA's Code of Conduct, as per Section 100.