Ala. Admin. Code r. 30-X-6-.02 - Independence, Integrity And Objectivity

Current through Register Vol. 40, No. 6, March 31, 2022

(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

Notes

Ala. Admin. Code r. 30-X-6-.02

Filed September 3, 1982.

Statutory Authority: Code of Ala. 1975, §§ 34-1-1, et seq.