Editorial Staff

Publisher/Editor-in-Chief
Colleen Katz

Managing Editor
Cheryl Rosen

Senior Editors
Laura Baron
Katharine W. Coveleski
Peter D. Fleming
Michael Hayes
James Quaglietta
Robert Tie

Senior Assistant Editor
Sarah Cobb

Assistant Editor
Vince Nolan

Contributing Editors
Anita Dennis
Lesli S. Laffie
Joan Mancuso
Barbara J. Shildneck
Stanley Zarowin

Production Director
Peter M. Tuohy 

Art Director
Jeryl A. Costello

Production Manager
Gene Cioffi

Senior Manager—
Production Services—
Publishing Technology
Robert DiCorcia

Production Editor
D. Hillel Lofaso

Senior Production Associates
Valrie Mason
Ingrid Medina

Associate Publisher
Thomas R. Greve

Advertising Team Manager
Karin DeMarco

Advertising Representatives
Joseph Torres
Kurt Weber

Advertising Coordinator
John Weinberg

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Highlights

INSTITUTE ISSUES ETHICS ED AND MORE Q&As
The AICPA Professional Ethics Executive Committee (PEEC) issued an exposure draft (ED), Omnibus Proposal of Professional Ethics Division Interpretations and Rulings (www.aicpa.org/members/div/ethics/), that proposes three rulings—two new and one revised—in the Institute’s Code of Professional Conduct. Under Rule 102, Integrity and Objectivity, a member would have to inform clients of the use of a third party to provide any professional services for them or on their behalf prior to sharing confidential client information with that provider. Under Rule 201, General Standards, and Rule 202, Compliance With Standards, a member using a third-party provider would be responsible for all work performed by the provider. And under Rule 301, Confidential Client Information, a member using a third party to provide any professional services for or on behalf of a client —or administrative support services, such as record storage or software hosting, on behalf of the member—would be required to enter into a contractual agreement with that provider to ensure the confidentiality of client records.

Susan Coffey, AICPA vice-president, audit quality and professional ethics, said the proposed rule “would clarify the AICPA’s requirements.” Currently, members are permitted to decide for themselves whether to inform clients that services may be outsourced, and the PEEC’s long-standing position has been that members “are ultimately responsible for the quality of any work performed by a third-party provider.” Comments on the ED are due October 8.

The PEEC also developed a series of questions and answers (Q&As) to help practitioners apply the provisions of Interpretation 101-3, “Performance of Nonattest Services,” of the Code of Professional Conduct, when providing information technology services to attest clients (www.aicpa.org/download/). The PEEC continues to publish Q&As concerning the interpretation’s general requirements (www.aicpa.org/download/ethics/nonattest_q_a.pdf).

The PEEC issued the Q&As—among others it recently published (see “Highlights,” JofA, Sep.04, page 8)—in response to member requests for assistance in applying the interpretation, which was released in September 2003. The PEEC also revised the interpretation’s general requirement no. 3—that is, to document in writing the understanding the CPA establishes with the client—to clarify that it applies only once a client engages a member or firm to provide attest services. These documents as well as additional resources related to understanding and implementing Interpretation 101-3 are available at www.aicpa.org/members/div/ethics/intr_101-3.htm.

IASB PROPOSAL WOULD REVAMP CERTAIN DISCLOSURES
The International Accounting Standards Board (IASB) exposed a draft International Financial Reporting Standard (IFRS), ED 7, Financial Instruments: Disclosures (www.iasb.org/uploaded_files/documents/8_38_ed07-ed.pdf). The proposed guidance would require entities to disclose in their financial statements information that would enable interested parties to evaluate the significance of financial instruments to the entity’s financial position and performance; the nature and extent of risks arising from financial instruments to which the entity was exposed during the reporting period and as of the reporting date; and the entity’s capital. The board believes access to such information would enable investors to make more informed investment decisions.

If adopted, the draft standard will take effect for annual reporting periods beginning on or after January 1, 2007, and will apply to all entities. The degree of required disclosure will depend on the extent of the entity’s use of financial instruments and its exposure to related risk. Comments are due October 22.

Editorial Advisers

Catherine R. Allen, Kenneth D. Askelson, James Bean, John C. Boma, Jacob R. Brandzel, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Robert J. Freeman, Kim Gibson, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, DeAnn Hill, James E. Hunton, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, William F. Laurie, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Benjamin F. Mathews, David McIntee, Anita Meola, Debra Mitchell, Roger H. Molvar, Brenda Morris, Craig Murray, Lyne P. Noella, Edward T. Odmark, Mary P. Ricciardello, Mark L. Richardson, Marshall B. Romney, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Gary R. Trugman, Robert Willens, Mark A. Yahoudy