Standards & Compliance
The AICPA Code of Professional Conduct
The professional rules we live by — and what they mean for the people who trust us with their numbers.
Rules We Are Bound By, Not Promises We Hope to Keep
Almost any business can tell you it is honest. A CPA firm is held to something stronger than a sentiment: an enforceable ethical code. The AICPA Code of Professional Conduct sets out the rules that govern every member of the American Institute of Certified Public Accountants, and adherence to it is not optional, decorative, or aspirational. It is the standard by which our conduct is measured, and the standard against which we can be disciplined if we fall short.
That distinction is the whole point of the credential. When a lender extends a loan on the strength of financial statements we have audited, when a court relies on a report we have prepared, when a regulator accepts a filing, and when you make a decision based on the numbers we have put in front of you, the reliance is possible precisely because we operate under a binding code rather than our own good intentions. The Code is what converts our work product from one firm's opinion into something a third party can depend on.
This page is written for you, the client. It is not a legal treatise. It is an honest explanation, in plain terms, of the principal obligations we carry on every engagement — so that you understand not only what we do, but why we sometimes do things that a less disciplined firm would skip. Where we describe what the Code requires, read it as a description of what you should expect from us.
Threats and Safeguards
The Code does not try to anticipate every situation with a separate rule. Instead, at its heart is a conceptual framework: we are required to identify threats to our compliance with the rules, evaluate how significant those threats are, and apply safeguards that reduce them to an acceptable level. If no combination of safeguards can do that, we do not proceed. This framework forces us to think honestly about our own position rather than hide behind a checklist.
The Code groups the threats into recognizable categories, and naming them is the first step in managing them:
- Self-interest threat. A financial or other interest could improperly influence our judgment — for example, a fee arrangement that gives us a stake in a particular outcome.
- Self-review threat. We would be evaluating our own prior work — for example, auditing financial statements that our own firm helped prepare.
- Advocacy threat. Promoting a client's position could compromise our objectivity — for example, advocating aggressively for the client in a dispute we must also report on.
- Familiarity threat. A long or close relationship makes us too sympathetic — for example, a years-long friendship with a client's controller dulling our professional skepticism.
- Undue influence threat. Pressure or a dominant personality could override our judgment — for example, a client threatening to dismiss us unless we accept a questionable treatment.
- Management participation threat. We would be taking on a role that belongs to management — for example, making operating decisions for a client we also audit.
Safeguards — and Knowing When to Walk Away
Against these threats stand safeguards. Some are created by the profession, legislation, and regulation — licensing requirements, continuing education, peer review, and external oversight. Others live inside our own firm: our policies on engagement acceptance, our independence monitoring, our supervisory review of work, and our willingness to consult and to assign different people to different roles. Often a threat that is significant on its own can be reduced to an acceptable level when the right safeguards are in place.
But the framework has a hard floor. When a threat cannot be reduced to an acceptable level by any safeguard available to us, the answer is not to proceed carefully — it is to decline the engagement or to withdraw from it. What this means for you is concrete: on every engagement we actively evaluate our own objectivity, and we would rather lose a fee than put our name to work we cannot stand behind.
Straight Answers, Including the Unwelcome Ones
Integrity and objectivity are the two principles closest to a client's everyday experience of working with us. Integrity requires that we be honest and candid within the constraints of client confidentiality. Objectivity requires that we be impartial, intellectually honest, and free of conflicts of interest. In practice these obligations reinforce one another, and the Code states them in unambiguous terms.
We may not knowingly misrepresent facts. We may not subordinate our professional judgment to others — not to a client, not to a supervisor, not to a counterparty. Where a conflict of interest exists, we must identify it, evaluate whether it can be managed, and, where appropriate, obtain consent or step aside. These are not abstractions; they shape every conversation we have with you.
What you get from this is simple and valuable: straight answers. If the deduction does not hold up, we will tell you. If the projection is optimistic, we will say so. If the structure you are considering creates a problem you have not seen, we will raise it. Good news is easy to deliver; the measure of a firm is whether it will also deliver the unwelcome news plainly and on time. We will.
Why an Independent Opinion Is Worth More
Independence is a specialized requirement that applies to attest engagements — audits, reviews, and similar work where we express assurance that others will rely upon. The Code requires independence in two dimensions at once. Independence in fact means we are genuinely impartial and free of any relationship that would compromise our judgment. Independence in appearance means that a reasonable, informed observer would also conclude we are impartial. Both must hold; it is not enough to be objective if the circumstances would lead a thoughtful outsider to doubt it.
Certain relationships and interests impair independence and are therefore off-limits when we provide attest services. These include direct financial interests in the client, certain loans and business relationships, employment ties between the firm and the client, and providing non-attest services that would place us in a management role or have us auditing our own work. We monitor these relationships across the firm, not just on a single engagement, because independence can be impaired by a connection an individual elsewhere in the firm holds.
The reason any of this is worth the discipline comes down to what you receive: an opinion that carries weight. An audit report from a firm that is genuinely and visibly independent is something a bank, an investor, or a regulator can rely on. That reliance is the entire value of the work — and it exists only because we keep ourselves at arm's length.
Competence and Care, Not Just Willingness
Being honest and independent is necessary but not sufficient. The Code's general standards govern the quality of the work itself, and they set a floor we must meet before we accept and while we perform any engagement:
- Professional competence. We undertake only those engagements that we, our firm, can reasonably expect to complete with the necessary skill and knowledge.
- Due professional care. We perform our work diligently and observe the applicable technical and ethical standards throughout, rather than taking shortcuts under time pressure.
- Planning and supervision. Engagements are properly planned, and the people doing the work are supervised by those accountable for it.
- Sufficient relevant data. We obtain enough relevant information to provide a reasonable basis for any conclusion or recommendation we give you.
The practical consequence is that we will tell you honestly when a matter falls outside our competence, and we will either build the right team, bring in a specialist, or refer you elsewhere. We would rather decline work we cannot do well than accept it and learn on your dime.
Circular 230 and Practice Before the IRS
When we represent you before the Internal Revenue Service or prepare returns and advice for federal tax purposes, a further set of standards applies. Treasury Department Circular 230 governs practice before the IRS, and it carries real teeth. It sets out the duties we owe, the restrictions we operate under, the rights you hold, and the sanctions that follow a breach.
Duties and Restrictions
Circular 230's duties and restrictions require us to exercise diligence as to accuracy in the documents and representations we prepare and submit. Where we rely on information or work provided by others, we may do so only in good faith and with reasonable care; we cannot ignore implications that should be obvious to a competent practitioner. We must dispose of your matters promptly rather than letting them drift, and we must handle conflicts of interest with the same rigor the Code demands everywhere else — identifying them, and proceeding only where the conflict can be properly managed and consented to.
Your Rights
The same rules protect you. You have the right to your own records: we must promptly return the records you need to comply with your tax obligations, and we cannot hold them hostage over a fee dispute. You have the right to competent representation by a practitioner who is diligent, candid, and free of disqualifying conflicts. These are not courtesies we extend; they are obligations we owe.
Sanctions
The consequences of violating Circular 230 are serious and public. A practitioner who breaches its rules may be censured, suspended, or disbarred from practice before the IRS, and may face monetary penalties. The existence of these sanctions is part of what makes the system trustworthy — the standards we describe here are backed by an enforcement regime, not by our promise alone.
Substantiation and Disclosure for Tax Return Positions
Nowhere is this discipline more visible to you than in how we handle positions on your return. A position is not something we take because it is favorable; it is something we take because it has the appropriate level of support. Depending on the position and on whether it is disclosed, the recognized standards run from a reasonable basis at the lower end, to substantial authority, to a more-likely-than-not level of confidence for the most significant positions. We will tell you, in plain terms, where a given position falls and how strong its support is.
That candor extends to the downside. We are obligated to advise you about potential penalties associated with a position and about the documentation and substantiation needed to support it — the receipts, contemporaneous records, and contracts that turn an assertion into a defensible filing. A deduction is only as good as the records behind it, and we will tell you what those records need to be before, not after, the question arises.
Where a position warrants it, the right course is disclosure rather than silence. Adequately disclosing a position — for example, by attaching a disclosure statement such as Form 8275 to the return — can be the proper way to take a defensible but uncertain position openly. We will recommend disclosure when the facts call for it, and we will explain the trade-offs so the decision is one you make with full information.
And the Standards We Have Not Listed Here
This page is an overview, written for clarity rather than completeness. It describes the obligations that touch your experience most directly: how we guard our objectivity, how we stay independent, how we keep our work competent, and how we conduct ourselves in tax practice. It is an honest summary of how we work — but it is not the whole of the framework that governs us.
A great deal more authoritative guidance shapes our work behind the scenes. The Statements on Standards for Tax Services, the Statements on Standards for Accounting and Review Services, the profession's quality-management standards, and a range of other technical and ethical pronouncements all bind us, and we take each of them just as seriously as the principles described above. We have not detailed them here only because they are less directly pertinent to your day-to-day experience of working with us — not because they matter less to us. If you would like to understand how any of them applies to your situation, ask, and we will explain it plainly.