Regulators like the Securities and Exchange Commission, state insurance commissions and federal banking agencies presently prohibit organizations under their jurisdiction from entering into certain types of indemnification and limitation of liability provisions in agreements for the performance of audit or other attest services. A new interpretation by the Professional Ethics Executive Committee of the AICPA prohibits members from using their provisions when contracting for audit and other attest services when their employer or client is subject to the requirements of one of these regulators.

"The purpose of this standard is to remind practitioners of their responsibility to comply with regulators," said Susan Coffey, AICPA vice president of member quality and state regulation. "Current AICPA standards allow certain indemnification and limitation of liability provisions to be included in agreements for audit and attest services. However, in cases where a regulator’s requirements are more restrictive than AICPA standards, our members must comply with the more restrictive standard."

The PEEC's standard, effective July 31, may be found at http://www.aicpa.org/download/ethics/EDITED_Adopted_501_8_final.pdf.