Current through Register Vol. 42, No. 5, February 29, 2024
(1) Independence. A registrant or a firm of
which he is a partner or shareholder shall not express an opinion on financial
statements of an enterprise unless he and his firm are independent with respect
to such enterprise. Independence will be considered to be impaired if, for
example:
(a) During the period of his
professional engagement, or at the time of expressing his opinion, he or his
firm
1. had or was committed to acquire any
direct or material indirect financial interest in the enterprise; or
2. was a trustee of any trust or executor or
administrator of any estate if such trust or estate had or was committed to
acquire any direct or material indirect financial interest in the enterprise;
or
3. had any joint closely held
business investment with the enterprise or any officer, director, or principal
stockholder thereof which was material in relation to his or his firm's net
worth; or
4. had any loan to or
from the enterprise or any officer, director or principal stockholder thereof.
This latter proscription does not apply to the following loans from a financial
institution when made under normal lending procedures, terms and requirements:
(i) Loans obtained by him or his firm which
are not material in relation to the new worth of such borrower.
(ii) Home mortgages.
(iii) Other secured loans, except loans
guaranteed by his firm which are otherwise unsecured.
(b) During the period covered by
the financial statements, during the period of the professional engagement, or
at the time of expressing an opinion, he or his firm
1. was connected with the enterprise as a
promoter, underwriter, or voting trustee, a director or officer or in any
capacity equivalent to that of a member of management or of an employee;
or
2. was a trustee for any pension
or profit-sharing trust of the enterprise.
(c) The above examples are not intended to be
all-inclusive.
(2)
Integrity and Objectivity. A Certified Public Accountant or Public Accountant
shall not knowingly misrepresent facts, and when engaged in the practice of
public accounting, including the rendering of tax and management advisory
services, shall not subordinate his judgment to others. In tax practice, he may
resolve doubt in favor of his client as long as there is reasonable support for
his position.
Author: Alabama Board of Public
Accountancy
