| Attest engagement team | Consists of individuals participating in the attest engagement, including those who perform concurring and second partner reviews. The attest engagement team includes all employees and contractors retained by the firm who participate in the attest engagement, irrespective of their functional classification (for example, audit, tax, or management consulting services), except specialists as discussed in SAS No. 73, "Using the Work of a Specialist," and individuals who perform only routine clerical functions, such as word processing and photocopying.
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| Audit committee | A committee of a corporation's board of directors that engages, compensates, and oversees the work of the independent auditors, monitors activities of the internal auditing staff, and intervenes in any disputes between management and the independent auditors. Members of the audit committee must be independent directors, that is, members of the board of directors who do not also serve as corporate officers, or have other relationships that might impair independence.
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| Close relative | A parent, sibling, or nondependent child.
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| Covered member | A covered member may be: (a) an individual on the attest engagement team; (b) an individual in a position to influence the attest engagement; (c) a partner or manager who provides nonattest services to the attest client beginning once he or she provides 10 hours of nonattest services to the client within any fiscal year and ending on the later of the date (1) the firm signs the report on the financial statements for the fiscal year during which those services were provided, or (2) he or she no longer expects to provide 10 or more hours of nonattest services to the attest client on a recurring basis; (d) a partner in the office in which the lead attest engagement partner primarily practices in connection with the attest engagement; (e) the firm, including the firm's employee benefit plans; or ( f ) an entity whose operating, financial, or accounting policies can be controlled by any of the individuals or entities described in (a) through (e) or by two or more such individuals or entities if they act together.
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| Direct financial interest | A personal investment under the direct control of the investor. The Code of Professional Conduct prohibits CPAs from having any direct financial interests in their attest clients. Investments made by a CPA's spouse or dependents also are regarded as direct financial interests of the CPA.
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| Ethics Rulings | Pronouncements of the AICPA that explain the application of Rules and Interpretations of the Code of Professional Conduct to specific factual circumstances involving professional ethics.
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| Immediate family member | A spouse, spousal equivalent, or dependent (whether or not related).
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| Independence | An important Rule of Conduct that prohibits CPAs from performing attestation services for an enterprise unless they are independent with respect to such enterprise; independence is impaired by a financial interest, service as an officer or trustee, loans to or from the enterprise, and various other relationships.
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| Individual in a position to influence the attest engagement | An individual who: (a) evaluates the performance or recommends the compensation of the attest engagement partner; (b) directly supervises or manages the attest engagement partner, including all successively senior levels above that individual through the firm's chief executive; (c) consults with the attest engagement team regarding technical or industry-specific issues related to the attest engagement; or (d) participates in or oversees at all successively senior levels, quality control activities, including internal monitoring, with respect to the specific attest engagement.
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| Indirect financial interest | An investment in which the specific investment decisions are not under the direct control of the investor. An example is an investment in a professionally managed mutual fund. The Code of Professional Conduct allows CPAs to have indirect financial interests in attest clients, as long as the investment is not material in relation to the CPA's net worth.
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| Interpretations | Guidelines issued by the AICPA for the scope and application of the Rules of Conduct.
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| Joint closely held investment | An investment in an entity or property by the member and the client (or the client's officers or directors, or any owner who has the ability to exercise significant influence over the client) that enables them to control (as defined by GAAP for consolidation purposes) the entity or property.
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| Key position | A position in which an individual has: (a) primary responsibility for significant accounting functions that support material components of the financial statements; (b) primary responsibility for the preparation of the financial statements; or (c) the ability to exercise influence over the contents of the financial statements, including when the individual is a member of the board of directors, or similar governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.
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| Manager | A professional employee of the public accounting firm who either has continuing responsibility for the overall planning and supervision of engagements or has the authority to determine that an engagement is complete subject to final partner approval, if required.
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| Period of the professional engagement | A period that begins when a member either signs an initial engagement letter or other agreement to perform attest services or begins to perform an attest engagement for a client, whichever is earlier. The period lasts for the entire duration of the professional relationship (which could cover many periods) and ends with the formal or informal notification, either by the member or the client, of the termination of the professional relationship or by the issuance of a report, whichever is later. Accordingly, the period does not end with the issuance of a report and recommence with the beginning of the following year's attest engagement.
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| Principles | The part of the AICPA Code of Professional Conduct that expresses the profession's responsibilities to the public, clients, and colleagues and provides a framework for the Rules.
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| Profession | An activity that involves a responsibility to serve the public, has a complex body of knowledge, has standards for admission, and has a need for public confidence.
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| Prospective financial information | Presentations of future financial position, results of operations, or cash flows. Such presentations are often referred to as financial forecasts or projections.
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| Rules | A group of enforceable ethical standards included in the AICPA Code of Professional Conduct.
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| Significant influence | One who meets the criteria established in Accounting Principles Board Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock," and its interpretations (AC section 18) to determine the ability of an investor to exercise significant influence over another entity. In general, these criteria include an ownership interest of 20 percent or more of the entity.
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