NONATTEST SERVICES – WHAT ARE THEY AND WHY DO THEY MATTER

Independence is a critical concern for CPAs and is the very foundation of attest services. Independence is a state of mind that permits CPAs to perform without being affected by influences that compromise professional judgment, allowing them to act with integrity and exercise objectivity and professional skepticism. The trust the public places in CPAs makes it important for them to avoid circumstances that could create a conclusion that their objectivity or professional skepticism has been compromised in the work they perform.

When a member provides non-attest services for an attest client, threats to independence may exist. Whether the services can be provided depends on the nature of the services and whether the client is willing and able to meet certain responsibilities. In many cases, safeguards may be put in place so that threats are at an acceptable level and independence would not be impaired.

The interpretations of the “Non-attest Services” subtopic of the “Independence Rule” provide guidance on when non-attest services could or would impair independence. This non-authoritative tool is designed to assist members in understanding the independence requirements related to providing non-attest services and with evaluating threats to independence when providing these services. However, the aggregate effect of performing multiple services of this type may require a more rigorous application of safeguards. Still, the effects of others always impair independence, such as the performance of appraisal, valuation, or actuarial services that entail a significant degree of subjectivity where the results of the service, individually or when combined with other such services, are material to the attest client's financial statements.

The CPA cannot assume management's responsibilities and must be satisfied that the attest client and its management will meet their responsibilities in this area.

Before performing non-attest services, the member is required to establish and document in writing his or her understanding with the client regarding:

• The objectives of the engagement
• The services to be performed
• The attest client's acceptance of its responsibilities
• The member's responsibilities
• Any limitations of the engagement