Our article within the December 2017 factor of the Magazine, “Choice Dispute Answer for Accounting and Comparable Services and products Disputes,” makes the next remark that must be clarified:
If a shopper recordsdata monetary statements with the SEC, CPAs will have to perceive the SEC’s and PCAOB’s independence necessities ahead of placing an ADR or limitation of damages clause into an engagement letter. In most cases, the inclusion of ADR clauses won’t impact CPAs’ independence; on the other hand, SEC registrants and sure different governmental regulated enterprises are precluded from together with an indemnification or legal responsibility limitation provision in an engagement letter, rather then one associated with a understanding misrepresentation by means of control.
There may be other steering within the literature relating to using an indemnification clause associated with misrepresentations by means of control in an SEC or different regulatory submitting. The SEC personnel takes the location that this and different forms of indemnification clauses don’t seem to be allowed in engagement letters, as a result of they’re regarded as to impair independence and might result in using much less thorough or intensive audit procedures than the auditor may another way use.
The authors thank the alert reader who introduced this to our consideration.
Supply By means of https://www.cpajournal.com/2018/03/16/clarification-alternative-dispute-resolution/