Council Interpretation 204.8
Independence - Disclosure of Impairment of Independence
Professional services, other than assurance or specified auditing procedures and insolvency engagements
204.8/1 Members and firms who provide a professional service which does not require the member or
firm to be independent are required by Rule 204.8 to disclose any activity , interest or
relationship which, in respect of the professional service, would be seen by a reasonable
observer to impair the member's or firm’s independence. Members and firms should refer to
Rules 204.1 to 204.7 and the related Council Interpretations when determining whether they
must be independent and would appear to be independent with respect to particular
204.8/2 Such disclosure is required whether or not any written report or other communication is
provided and should indicate the nature of the activity or relationship and the nature and extent
of the interest. Any written communication concerning or accompanying financial statements or
financial or other information must include such disclosure.
204.8/3 Independence is not required for compilation engagements. Where the provider of the
compilation service may be seen to be lacking independence, the disclosure requirement of
Rule 204.8 applies.
204.8/4 For the purposes of Rule 204.8 the preparation of accounting records or journal entries in
connection with a compilation engagement is not an activity that requires disclosure in the
Notice to Reader unless such preparation involves complex transactions as contemplated by
paragraph 143 of the Council Interpretations to Rule 204.1 to 204.6.
204.8/5 Tax return services may require disclosure in respect of some of the information filed with the
return. If the return is simply the assembling and reporting of information provided by the
taxpayer, then the member or firm involved has simply processed that information and
disclosure should not be necessary.
204.8/6 Members and firms are cautioned that disclosure under Rule 204.8 does not relieve them from
their obligation to comply with the rules of professional conduct and in particular Rules 201,
202, 205 and 206.
The next Council Interpretation is 204/20.