#Loan staff arrangement code#
#Loan staff arrangement professional#

In a staff augmentation arrangement, the client agrees to direct and supervise the loaned staff’s activities the firm’s role is to ensure compliance with the terms of the arrangement. What are the differences between a staff augmentation arrangement and a nonattest services engagement? The guidance neither overrides nor amends the Code, which is the only authoritative source of AICPA ethics rules.

#Loan staff arrangement professional#

To help firms implement the new interpretation, the AICPA Professional Ethics Division updated its nonauthoritative guidance in Frequently Asked Questions: General Ethics. This individual will (1) determine the nature and scope of the activities (2) supervise the loaned staff and (3) evaluate the adequacy of the activities and findings that result. ■ The client agrees to designate a person with suitable skill, knowledge, and/or experience to oversee the loaned staff ’s activities. ■ The loaned staff perform only permissible services as per the Code’s “ Nonattest Services” subtopic (ET §1.295) (e.g., the firm cannot lend a staff person to act as a temporary CFO for the client or perform a prohibited valuation service) and ■ The firm’s loaned staff do not participate in and are unable to influence the attest engagement covering any period that includes the staff augmentation arrangement ■ The firm does not expect the staff augmentation arrangement to reoccur ■ The firm expects that the arrangement will be brief, presumably 30 days or less Specifically, a staff augmentation arrangement would be permissible if the attest client encounters an unexpected situation that creates significant hardship for the client to make other arrangements and all the following additional safeguards are met. However, the arrangement may be permitted under very limited conditions. For this reason, the interpretation generally precludes a firm’s staff augmentation arrangement with an attest client. Given the client’s role in supervising the staff ’s day-to-day work, the appearance of independence is a prime consideration. The new interpretation addresses possible familiarity, management participation, advocacy, and self-review threats to the firm’s independence.

#Loan staff arrangement code#

The interpretation fills a void in the Code that required members to evaluate staff augmentation arrangements for attest clients using the “ Conceptual Framework for Independence” interpretation (ET §1.210.010) and converges the Code with provisions in the International Code of Ethics for Professional Accountants (including International Independence Standards), which addresses these arrangements under “ Temporary Personnel Assignments” (§525). Staff augmentation arrangements differ from typical professional services engagements because the client’s management - not the firm’s - will supervise the firm’s personnel (“loaned staff ”) and direct their work. WHAT IS A STAFF AUGMENTATION ARRANGEMENT?Ī “staff augmentation” or loaned staff arrangement exists when a firm lends its personnel to a client to supplement or “augment” the client’s staff for a certain period. Note that the material in the article applies only to audits of nonpublic companies. This article highlights these changes to the Code’s independence rules and related (nonauthoritative) guidance. ■ The “ Scope and Applicability of Nonattest Services” interpretation (ET §1.295.010). ■ The “ Agreed-Upon Procedure Engagements Performed in Accordance With SSAEs” interpretation (ET §1.297.020) and ■ The “ Client Affiliates” interpretation (ET §1.224.010) Concurrently, PEEC issued related revisions to three existing independence interpretations: In March 2021, the AICPA Professional Ethics Executive Committee (PEEC) released the “ Staff Augmentation Arrangements” interpretation (ET §1.275.007), a new interpretation of the “ Independence Rule” (ET §1.200.001) of the AICPA Code of Professional Conduct (the Code) that addresses the loaning of staff to an attest client.

Understand the changes to the AICPA Code of Professional Conduct’s independence rules relating to loaning staff to an attest client. Journal of Accountancy - May 2022 Can a CPA firm loan staff to an attest client?