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Ch. Accy 1 Note Note: Chapter Accy 1 as it existed on June 30, 1974 was repealed and a new Chapter Accy 1 was created, Register, June, 1974, No. 222, effective July 1, 1974.
subch. I of ch. Accy 1 Subchapter I — Applicability and Definitions
Accy 1.001 Accy 1.001 Applicability of rules of conduct to certified public accountants.
Accy 1.001(1) (1)Chapters Accy 1 to 9 apply to a person who practices as a certified public accountant in this state.
Accy 1.001(2) (2) A certified public accountant may be held responsible for compliance with the rules of the examining board by any person associated with the certified public accountant in a firm who is either under his or her supervision or is a member of the firm.
Accy 1.001(3) (3) A certified public accountant shall not permit others to carry out acts on his or her behalf, either with or without compensation, which, if carried out by the certified public accountant, would violate chs. Accy 1 to 9.
Accy 1.001 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; correction made under s. 13.93 (2m) (b) 1., Stats., Register, March, 1993, No. 447; CR 03-071: r. and recr. Register May 2004 No. 581, eff. 6-1-04.
Accy 1.002 Accy 1.002 Applicability of rules of conduct to certified public accountants who have a significant influence over a CPA-related business or who advertise as a CPA.
Accy 1.002(1)(1) A person licensed as a certified public accountant that has significant influence over a CPA-related business is considered to be practicing as a certified public accountant in the CPA-related business and all persons with ownership interest in the business shall follow the rules of the examining board in the operation of the CPA-related business.
Accy 1.002(2) (2) A person who operates a business and is licensed as a certified public accountant and who advertises or otherwise holds out as a certified public accountant shall follow the rules of the examining board in the operation of any business.
Accy 1.002 History History: Cr. Register, June, 1982, No. 318, eff. 7-1-82; CR 03-071: r. and recr. Register May 2004 No. 581, eff. 6-1-04.
Accy 1.003 Accy 1.003 Definitions. As used in chs. Accy 1 to 9:
Accy 1.003(1) (1) "Attest service" means any of the following, if performed or intended to be performed in accordance with the statements incorporated under s. Accy 1.205:
Accy 1.003(1)(a) (a) An audit or any other engagement.
Accy 1.003(1)(b) (b) A review or compilation of a financial statement.
Accy 1.003(1)(c) (c) An examination of prospective financial information.
Accy 1.003(2) (2) "Audit" means an examination of financial statements of a person by a certified public accountant, conducted in accordance with generally accepted auditing standards, to determine whether, in the opinion of the certified public accountant, the statements conform with generally accepted accounting principles or, if applicable, with another comprehensive basis of accounting.
Accy 1.003(3) (3) "Commission" means compensation, except a referral fee, for recommending or referring any product or service to be supplied by another person.
Accy 1.003(4) (4) "Compilation of a financial statement" means a presentation of information in the form of a financial statement that is the representation of any other person without the undertaking of the certified public accountant to express any assurance on the statement.
Accy 1.003(5) (5) "Contingent fee" means a fee established for the performance of any service according to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service.
Accy 1.003(6) (6) "CPA-related business" means a business that performs for clients any of the professional services related to accounting, tax, personal financial planning, or litigation support services or those services for which standards are established relating to audits, compilations and reviews of financial statements and examinations or compilations of prospective financial information.
Accy 1.003(7) (7) "Examination of prospective financial information" means an evaluation by a certified public accountant of a forecast or projection, the support underlying the assumptions in the forecast or projection, whether the presentation of the forecast or projection is in conformity with professional presentation guidelines, or, whether the assumptions in the forecast or projection provide a reasonable basis for the forecast or projection.
Accy 1.003(8) (8) "Firm" means a proprietorship, partnership, limited liability partnership, corporation, service corporation, or limited liability company.
Accy 1.003(9) (9) "Forecast" means a prospective financial statement that presents, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and changes in financial position or cash flows that are based on the responsible party's assumptions reflecting conditions it expects to exist and the course of action it expects to take.
Accy 1.003(10) (10) "Member of a firm" means a director, manager, employee, officer, owner, shareholder, principal, or partner of a firm.
Accy 1.003(11) (11) "Person" means any natural person, firm, association, or other legal entity.
Accy 1.003(12) (12) "Projection" means a prospective financial statement that presents, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions, an entity's expected financial position, results of operations, and changes in financial position or cash flows that are based on the responsible party's assumptions reflecting conditions it expects would exist and the course of action it expects would be taken given such hypothetical assumptions.
Accy 1.003(13) (13) "Referral fee" means compensation for recommending or referring any service of a certified public accountant to any person.
Accy 1.003(14) (14) "Review" means to perform an inquiry and analytical procedures that permit a certified public accountant to determine whether there is a reasonable basis for expressing limited assurance that there are no material modifications that should be made to financial statements in order for them to be in conformity with generally accepted accounting principles or, if applicable, with another comprehensive basis of accounting.
Accy 1.003(15) (15) "Significant influence" means the ability of an investor to exercise significant influence over operating and financial policies of an investee. The extent of ownership is not conclusive. Direct or indirect ownership of 20% or more of an investee creates a presumption that the investor has significant influence in an investee. Ownership of less than 20% of a CPA-related business creates a presumption that the certified public accountant does not have significant influence in the CPA-related business. An ability to exercise significant influence may be indicated in several ways: representation on the board of directors, participation in policy making processes, material intercompany transactions, interchange of managerial personnel, technological dependency, and the extent of ownership by an investor in relation to the concentration of other shareholdings.
Accy 1.003 Note Note: Examples of indications that an investor may be unable to exercise significant influence over the operating and financial policies of an investee include:
Accy 1.003 Note (a) Opposition by the investee, such as litigation or complaints to government regulatory authorities, challenges the investor's ability to exercise significant influence.
Accy 1.003 Note (b) The investor and investee sign an agreement under which the investor surrenders significant rights as a shareholder.
Accy 1.003 Note (c) Majority ownership of the investee is concentrated among a small group of shareholders who operate the investee without regard to the views of the investor.
Accy 1.003 Note (d) The investor needs or wants more financial information to apply the equity method than is available to the investee's other shareholders, for example, the investor wants quarterly financial information from an investee that publicly reports only annually, tries to obtain that information, and fails.
Accy 1.003 Note (e) The investor tries and fails to obtain representation on the investee's board of directors.
Accy 1.003 History History: CR 03-071: (2) to (5), (7), (9), and (11) to (14) renum. from Accy 1.302 (1) (b) to (k) and am. (2), (4), (7), (11), (13) and (14), cr. (intro.), (1), (6), (8), (10) and (15), Register May 2004 No. 581, eff. 6-1-04; 2013 Wis. Act 210: am. (1) Register April 2014 No. 700, eff. 5-1-14.
subch. II of ch. Accy 1 Subchapter II — Independence, Integrity and Objectivity
Accy 1.101 Accy 1.101 Independence standards. The following independence standards of the accounting profession are adopted by reference and shall be used by certified public accountants in Wisconsin:
The Code of Professional Conduct ET Section 101, including Sections ET 101.01 through ET 101.19, available on the Internet at http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/sec100.aspx, as of January 31, 2013, and published by the American Institute of Certified Public Accountants in print form as AICPA Professional Standards Volume 3, as of January 31, 2013. The printed volume is available at:
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775
Accy 1.101 Note Note: Definitions of terms used in the independence standards, ET Section 101, are included in ET Section 92 of the Code of Professional Conduct published by the American Institute of Certified Public Accountants and available on the Internet at http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/et_92.aspx and in the same printed volume as ET Section 101.
Accy 1.101 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (2), Register, December, 1974, No. 228, eff. 1-1-75; cr. (2) (d), Register, February, 1976, No. 242, eff. 4-1-76; cr. (2) (e), Register, January, 1977, No. 253, eff. 3-1-77; r. and recr. (1) and cr. (2) (f), Register, July, 1979, No. 283, eff. 9-1-79; r. and recr. (2) (a), am. (2) (d) 2. intro. and d., cr. (2) (g), Register, July, 1980, No. 295, eff. 8-1-80; corrections made under s. 13.93 (2m) (b) 1. and 5., Stats., Register, March, 1993, No. 447; CR 02-120: r. and recr. Register November 2003 No. 575, eff. 12-1-03; 2013 Wis. Act 210: am. Register April 2014 No. 700, eff. 5-1-14.
Accy 1.102 Accy 1.102 Integrity and objectivity. No person licensed to practice as a certified public accountant as defined in the statutes, shall knowingly misrepresent facts, and when engaged in the practice of public accounting, including the rendering of tax and management advisory services, shall not subordinate his or her judgment to others. In tax practice, a member may resolve doubt in favor of the client as long as there is reasonable support for that position.
Accy 1.102 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; corrections made under s. 13.93 (2m) (b) 5., Stats., Register, March 1993, No. 447; CR 03-071: am. Register May 2004 No. 581, eff. 6-1-04.
subch. III of ch. Accy 1 Subchapter III — Competence and Technical Standards
Accy 1.201 Accy 1.201 General standards.
Accy 1.201(1)(1) All persons licensed to practice as a certified public accountant, as defined in the statutes, shall comply with the following general standards as interpreted by bodies designated by the American Institute of Certified Public Accountants Council, and must justify any departures therefrom.
Accy 1.201(1)(a) (a) Professional competence. A certified public accountant shall undertake only those engagements which the certified public accountant or the firm can reasonably expect to complete with professional competence.
Accy 1.201(1)(b) (b) Due professional care. A certified public accountant shall exercise due professional care in the performance of an engagement.
Accy 1.201(1)(c) (c) Planning and supervision. A certified public accountant shall adequately plan and supervise an engagement.
Accy 1.201(1)(d) (d) Sufficient relevant data. A certified public accountant shall obtain sufficient relative data to afford a reasonable basis for conclusions or recommendations in relation to an engagement.
Accy 1.201(1)(e) (e) Forecasts. A certified public accountant shall not permit the certified public accountant's name to be used in conjunction with any forecast of future transactions in a manner which may lead to the belief that the certified public accountant vouches for the achievability of the forecast. This paragraph does not prohibit a certified public accountant from preparing, or assisting a client in the preparation of, forecasts of the results of future transactions. When a certified public accountant's name is associated with such forecasts, there shall be the presumption that such data may be used by parties other than the client. Therefore, full disclosure must be made of the sources of the information used and the major assumptions made in the preparation of the statements and analyses, and character of the work performed by the member, and the degree of the responsibility he or she is taking.
Accy 1.201(2) (2) Interpretations of s. Accy 1.201, not intended to be all-inclusive, are as follows:
Accy 1.201(2)(a) (a) A certified public accountant who accepts a professional engagement implies that he or she has the necessary competence to complete the engagement according to professional standards, applying the certified public accountant's knowledge and skill with reasonable care and diligence, but the certified public accountant does not assume a responsibility for infallibility of knowledge or judgment.
Accy 1.201(2)(b) (b) Competence in the practice of public accounting involves both the technical qualifications of the certified public accountant and his or her staff and the ability to supervise and evaluate the quality of the work performed. Competence relates both to knowledge of the profession's standards, techniques and the technical subject matter involved, and to the capability to exercise sound judgment in applying such knowledge to each engagement.
Accy 1.201(2)(c) (c) The certified public accountant may have the knowledge required to complete an engagement professionally before undertaking it. In many cases, however, additional research or consultation with others may be necessary during the course of the engagement. This does not ordinarily represent a lack of competence, but rather is a normal part of the professional conduct of an engagement.
Accy 1.201(2)(d) (d) However, if a certified public accountant is unable to gain sufficient competence through these means, he or she should suggest, in fairness to the client and the public, the engagement of someone competent to perform the needed service, either independently or as an associate.
Accy 1.201 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (2), Register, December, 1974, No. 228, eff. 1-1-75; r. and recr. (1) and am. (2) (a), Register, July, 1979, No. 283, eff. 9-1-79; (1) (e) renum. from Accy 1.204 (2) and am., Register, July, 1980, No. 295, eff. 8-1-80; corrections made under s. 13.93 (2m) (b) 1., Stats., Register, March, 1993, No. 447; CR 03-071: am. (1) (intro.) to (d) and (2) (a) to (d), r. and recr. (1) (e) Register May 2004 No. 581, eff. 6-1-04.
Accy 1.202 Accy 1.202 Auditing standards. A person licensed to practice as a certified public accountant shall not permit the certified public accountant's name to be associated with financial statements in such a manner as to imply that the certified public accountant is acting as an independent public accountant unless the certified public accountant has complied with the applicable generally accepted auditing standards promulgated by the American Institute of Certified Public Accountants. Statements on auditing standards used by the American Institute of Certified Public Accountants auditing standards executive committee are, for purposes of this rule, considered to be interpretations of the generally accepted auditing standards, and departures from such statements must be justified by those who do not follow them.
Accy 1.202 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (2), Register, February, 1976, No. 242, eff. 4-1-76; r. and recr. (1) Register, July, 1979, No. 283, eff. 9-1-79; CR 03-071: renum. (1) to be Accy 1.202 and am., r. (2) Register May 2004 No. 581, eff. 6-1-04.
Accy 1.203 Accy 1.203 Accounting principles.
Accy 1.203(1) (1) No person licensed to practice as a certified public accountant shall express an opinion that financial statements are presented in conformity with generally accepted accounting principles if such statements contain any departure from an accounting principle promulgated by the body designated by the council of the American Institute of Certified Public Accountants to establish such principles which has a material effect on the statements taken as a whole, unless he or she can demonstrate that due to unusual circumstances the financial statements would otherwise have been misleading. In such cases the report must describe the departure, the approximate effects thereof, if practicable, and the reasons why compliance with the principle would result in a misleading statement.
Accy 1.203 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (2), Register, December, 1974, No. 228, eff. 1-1-75; corrections made under s. 13.93 (2m) (b) 5., Stats., Register, March, 1993, No. 447; CR 03-071: renum. (1) to be Accy 1.203 and am., r. (2) Register May 2004 No. 581, eff. 6-1-04.
Accy 1.204 Accy 1.204 Other technical standards. A person licensed to practice as a certified public accountant shall comply with other technical standards promulgated by bodies designated by the American Institute of Certified Public Accountants Council to establish such standards, and departures must be justified by those who do not follow them.
Accy 1.204 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (2), Register, December, 1974, No. 228, eff. 1-1-75; r. and recr. (1), Register, July, 1979, No. 283, eff. 9-1-79; renum. (2) to be Accy 1.201 (1) (e), Register, July, 1980, No. 295, eff. 8-1-80; CR 03-071: am. Register May 2004 No. 581, eff. 6-1-04.
Accy 1.205 Accy 1.205 Standards for auditing, accounting and review services, and attestation engagements. The standards of the accounting and auditing profession that certified public accountants in Wisconsin shall use are (1) the Statements on Auditing Standards, the Statements on Standards for Accounting and Review Services, and the Statements on Standards for Attestation Engagements, published as AICPA Professional Standards by the American Institute of Certified Public Accountants, Inc.; and (2) the auditing standards of the Public Company Accounting Oversight Board. All of those Statements and Standards are incorporated by reference into this section.
Accy 1.205 Note Note: Copies of the Statements described above may be purchased from the American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York, NY 10036-8775.
Accy 1.205 History History: CR 01-133: cr. Register October 2002 No. 562, eff. 11-1-02; CR 03-071: am. Register May 2004 No. 571, eff. 6-1-04; 2013 Wis. Act 210: consol. (intro.) to (3) and renum. Accy 1.205 and am. Register April 2014 No. 700, eff. 5-1-14.
subch. IV of ch. Accy 1 Subchapter IV — Responsibilities to Clients
Accy 1.301 Accy 1.301 Confidential client information.
Accy 1.301(1) (1) No person licensed to practice as a certified public accountant shall disclose any confidential information obtained in the course of a professional engagement except with the consent of the client or through the due process of law.
Accy 1.301(2) (2) This rule shall not be construed:
Accy 1.301(2)(a) (a) To relieve such a person of the obligations under ss. Accy 1.202 and 1.203.
Accy 1.301(2)(b) (b) To affect in any way compliance with a validly issued subpoena or summons enforceable by order of a court,
Accy 1.301(2)(c) (c) To prohibit review of such a person's professional practices as a part of voluntary quality review under authorization of the American Institute of Certified Public Accountants or the Wisconsin Society of Certified Public Accountants, or
Accy 1.301(2)(d) (d) To preclude a certified public accountant from responding to an inquiry made by the Professional Ethics Division of the American Institute of Certified Public Accountants, by the duly constituted investigative or disciplinary body of a state society of certified public accountants, or under any state statutes.
Accy 1.301(3) (3) Members of the ethics division and trial board of the American Institute of Certified Public Accountants and professional practice reviewers under American Institute of Certified Public Accountants authorization, or their state society counterparts, shall not disclose any confidential client information which comes to their attention from such persons in disciplinary proceedings or otherwise in carrying out their official responsibilities. However, this prohibition shall not restrict the exchange of information with an aforementioned duly constituted investigative or disciplinary body.
Accy 1.301(4) (4) The prohibition in sub. (1) against disclosure of confidential information obtained in the course of a professional engagement does not apply to disclosure of such information when required to properly discharge the certified public accountant's responsibility according to the profession's standards. The prohibition would not apply, for example, to disclosure, as required by section 561 of Statement on Auditing Standards No. 1, of subsequent discovery of facts existing at the date of the auditor's report which would have affected the auditor's report had the auditor been aware of such facts.
Accy 1.301 History History: Cr. Register, June, 1974, No. 222, eff. 7-1-74; cr. (4), Register, December, 1974, No. 228, eff. 1-1-75; corrections made under s. 13.93 (2m) (b) 5., Stats., Register, March, 1993, No. 447; CR 03-071: am. (1), (2) (a), (c), (d) and (3), cons. and renum. (4) (intro.) and (a) to be (4) and am. Register May 2004 No. 581, eff. 6-1-04.
Accy 1.302 Accy 1.302 Contingent fees, commissions and referral fees.
Accy 1.302(1)(1) Contingent fees. Except as provided in sub. (3), a certified public accountant may charge a contingent fee provided the accountant and the client make a contingent fee agreement in writing, signed by the client, which states the method by which the fee is to be determined and describes all costs and expenses to be charged to the client. Upon conclusion of the contingent fee matter, the accountant shall provide the client with a written statement showing the fee and all the costs and expenses charged to the client.
Accy 1.302(2) (2)Certain contingent fees prohibited. No certified public accountant may receive a contingent fee from any person for whom the accountant performs attest services during the period of the attest services engagement or the period covered by any historical financial statements involved in the attest services.
Accy 1.302(3) (3)Commissions. Except as provided in sub. (5), a certified public accountant may receive a commission provided that at the time the referral or recommendation is made, the accountant informs the client in writing of the amount and reason for the commission.
Accy 1.302(4) (4)Certain commissions prohibited. No certified public accountant may receive a commission from any person for whom the accountant performs attest services, or may receive a commission for any products or services sold to any person for whom the accountant performs attest services, during the period of the attest services or the period covered by any historical financial statement involved in the attest services.
Accy 1.302(5) (5)Referral fees. No certified public accountant may receive a referral fee unless all of the following apply:
Accy 1.302(5)(a) (a) The certified public accountant who accepts the referral fee discloses to the client, in writing, at the time the referral is made, the amount of and reason for the referral fee.
Accy 1.302(5)(b) (b) The certified public accountant who pays the referral fee discloses to the client, in writing, within 30 days after the referral is made, the amount of and reason for the referral fee.
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