AICPA Confidentiality Rules for Outsourced Work | HelloBooks How the AICPA Code treats third-party service providers, where to find the interpretations, and how to pair them with 7216 consent in your engagement letter.
For AICPA members, outsourcing is an ethics question as well as a tax-law one. The Code has a definition of a third-party service provider and interpretations that apply when you use one.
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Smarter accounting for growing businessesIs it a third-party service provider?
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Definition from the AICPA Code (0.400.50). Read the current interpretations in the online Code.
The Code’s definitions (0.400.50) describe a third-party service provider as an entity the member does not control, individually or with the firm, or an individual not employed by the member who assists in providing professional services to clients. Most outsourcing firms and offshore staffing arrangements fall inside that definition.
The AICPA’s Professional Ethics Executive Committee has published sample client disclosure language that members can use to meet the requirement in the “Use of a Third-Party Service Provider” interpretation of the Integrity and Objectivity Rule. The Confidential Client Information Rule also has an interpretation on disclosing information to a third-party service provider.
Read both in the current online Code before drafting your client language. We link to the Code rather than paraphrase it, because the wording matters and interpretations are revised.
The AICPA disclosure and a 7216 consent do different jobs. One tells the client a third party may work on the engagement; the other authorises disclosure of tax return information. Many firms place the disclosure in the engagement letter and keep the 7216 consent as its own signed document, as Rev. Proc. 2013-14 expects.
General information for tax and accounting professionals, not legal advice. Rules are summarised from the primary sources listed on the date shown; read the current text before relying on it.
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