MODULE 21 PROFESSIONAL RESPONSIBILITIES 53

NOTE: The designated bodies are

(I) Financial Accounting Standards Board for accounting principles for businesses
(2) Governmental Accounting Standards Board for accounting principles for state and local governmental entities
(3) Public Company Accounting Oversight Boardfor auditing, attestation, quality control, ethics and independence
standards for companies covered by the Sarbanes-Oxley Act '
(4) International Accounting Standards Boardfor international accounting standards
(5) AICPA designated bodies .
(a) Accounting and Review Services Committee
(b) Auditing Standards Board

(c) Management Consulting Services Executive Committee

(d) Tax Executive Committee
(e) Forensic and Valuation Executive Committee

Rule 203 Accounting Principles. Member cannot provide positive or negative assurance that fi-
nancial statements are in conformity with GAAP if statements contain departures from GAAP
having a material effect on statements taken as a whole except when unusual circumstances would
make financial statements following GAAP misleading.
(1) When unusual circumstances require a departure from GAAP, CPA must disclose in report the
departure, its effects (if practicable), and reasons why compliance would result in a
misleading
statement.

Interpretation 203-1. CPAs are to allow departure from Authoritative Standards (GASB and
FASAB Pronouncements) only when results of applying will be misleading. Note that SFAS 162
states that there can no longer be justified departures from FASB pronouncements. The AICPA
has not yet revised Rule 203 to reflect this requirement.

(1) Requires use of professional judgment

(2) Examples of possible circumstances justifying departure are
(a) New legislation
(b) New form of business transaction
Interpretation 203-2. GASB and F ASAB Interpretations are covered by Rule 203

transmittal indicates financial statements are in ac-

cordance with GAAP, Rule 203 must be met. Iffi-
nancial statements are on member's letterhead,
member should disclose lack of independence.
11. Rule 203 applies to members performing
litigation
support services.
12. The CPA firm must provide adequate oversight
of
all services performed by a third-party provider for
the firm's clients to ensure that the provider
complies with professional standards.
Interpretation 203-3. (Deleted)

Interpretation 203-4. Rule 203 also applies to communications by employees such as reports to
regulatory authorities, creditors, and auditors.

Rule 201, 202, 203 Ethics Rulings

8. A member selecting subcontractors for consulting

services engagements is obligated to select subcon-
tractors on the basis of professional qualifications,
technical skills, etc.

9. A member should be in a position to supervise and

evaluate work of a specialist in his employ.
10. If a member prepares financial statements as a
stockholder, partner, director, or employee of an en-
tity, any transmittal should indicate the member's
, relationship and should not imply independence. If
 Rule 301 Confidential Client Information. Member in public practice shall not disclose con-
fidential client information without client consent except for

(1) Compliance with Rule 202 and 203 obligations

(2) Compliance with enforceable subpoena or sumrrions
(3) AICPA review of professional practice'
(4) Initiating complaint or responding to inquiry made by a recognized investigative or discipli-
nary body

Interpretation 301-1. (Deleteci)

Interpretation 301-2. (Deleted)