The final standards, released January 25 by the GAO, accounts for nearly four months of discussions between the agency and the AICPA. The AICPA stated that it had discussed many of its concerns with the GAO since the exposure draft on auditor independence was released Oct. 1, 2001, "including those involving the costs of restricting certain nonaudit services without corresponding benefits, the pervasiveness of the restrictions, and how an additional set of independence rules would result in confusion in an already extremely complex practice environment," explained the AICPA in its letter.

Since the GAO released the final standars last month, the AICPA announced that it no longer opposes government limits on consulting work done by accounting firms and said it would accept federal regulations aimed at preventing conflicts of interest. (See AICPA Supports Auditor Independence)

The association, representing over 340,000 accountants, stated its concern about the GAO's intent in establishing a "principles and safeguards" approach for the performance of nonaudit services. "While we support a principles-based approach," said the AICPA, "we were -- and remain -- concerned that without a sufficient degree of clarity the new standards may cause confusion for preparers, auditors and the public."

Despite the AICPA's suggestion that the GAO reexpose the revised standards, the GAO decided not to reexpose the revised standards, "but committed to meet with AICPa leadership to address issues to be clarified and to develop implementation guidance," the letter said.

The AICPA has scheduled meetings with the GAO to discuss any unintended consequences that the standard might have on smaller entities and on accounting firms. The AICPA encouraged members to submit any implementation issues or questions on the GAO standards to the AICPA so it can be added to a working list that will be presented to the GAO.

For further information on GAO independence standards, click here (PDF).

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