One change currently proposed by the International Federation of Accountants (IFAC) is for network firms to be independent of an audit client of another firm within a network. This will potentially have a significant impact on firms classified under the revised definition.  
 
The revised definition not only looks at how the networks operate but also how they are presented to third parties. The revised definition would classify firms as network firms if the firms belong to a larger structure that is aimed at cooperation and is clearly aimed at profit or cost sharing, or shares common ownership, control or management, common quality control policies or procedures, common business strategy, the use of a common brand name or a significant part of professional resources. This revised definition is effective for assurance reports dated on or after 31 December 2008. 
 
As a member body of IFAC, the Institute is committed to the adoption of the independence standards and the revisions will be considered by the Accounting Professional and Ethical Standards Board (APESB) shortly. It is anticipated that the APESB will amend the current Australian Code APES 110 in time for the 31 December 2008 application date.  
 
For more information:

• View the revised definition
• Return to the e-bulletin article New independence requirements