AICPA Offers Revised Exposure Draft on Independence Issues

The AICPA Professional Ethics Executive Committee has released an two-part exposure draft related to independence in auditing. This draft is a follow-up on an exposure draft from last year and addresses the impact which limitations on liability in engagement might have on independence, as well as guidance on the relationship between both foresnic accounting and tax preparation with independence. Of the findings in the engagement area, some of the more interesting include: provision that liability limitations must include a "perform services according to generally accepted auditing standards" proviso to avoid independence problems regarding compensatory damages, a "punitive" damage liability waiver is generally not an independence problem and alternative dispute resolution provisions usually are satisfactory, though specific language in such provisions could become problematic.