CPAs Responsible for Non-Members in Public Practice

By CPABC
Last Revision: 1/1/2019

It’s not usual for CPA firms to hire non-members, either undesignated technicians or foreign designated accountants, to work in their public practices. We remind members that they are responsible for the conduct of these non-members and will be held accountable for breaches of the CPABC Code of Professional Conduct (the Code) by these non-members. This means practitioners should convey to their non-CPA staff the standards of behaviour that are deemed to apply to non-members in public practice. The relevant Rules 406 and 408 are reproduced below.

Furthermore, we remind members that the Code is applicable to contractors, wherever they are located. If you are contemplating out-sourcing some of your bookkeeping or income tax preparation services, it’s vital that you ensure your contractors understand not only the confidentiality rules in our Code but also provincial privacy legislation.

Moreover, practitioners should consider seeking legal advice on disclosing to clients in the engagement letter the use of third-party service providers and obtaining client consent regarding the transfer of client personal information to these providers.

406.1: A member or registered firm engaged in the practice of public accounting who is associated in such practice with a non-registrant shall be responsible to CPABC for any failure of such non-registrant, in respect of all areas of practice of the member or firm, to abide by the CPA Code and in the application of this Rule, the CPA Code is deemed to apply as if such non-registrant were a registrant.

406.2: A member or firm engaged in a practice of public accounting to which another business or practice is related, or engaged in such related business or practice, shall be responsible to CPABC for any failure of a non-registrant who is associated with such related business or practice and who is under the member's or firm’s management or supervision or with whom the member or firm shares proprietary or other interest in such related business or practice to comply with the CPA Code. In the application of this Rule, the CPA Code is deemed to apply as if such related business or practice were the practice of public accounting and such non-registrant were a registrant.

408.1: A member or registered firm shall not associate in any way with a non-registrant in a practice of public accounting, or in a related business or practice, unless:

  1. such association maintains the good reputation of the profession and serves the public interest; and
  2. such business or practice establishes and maintains policies, procedures and arrangements suitable for ensuring that:
    1. every such non-registrant is knowledgeable of and complies with
      1. CPABC’s governing legislation, bylaws, regulations and Code; and
      2. the ethical and other regulations applicable to members of a recognized professional organization or regulated body of which the non-registrant is a member; and
    2. no style or presentation or communication is used which implies that the non-registrant is a registrant.

408.2: A member may associate with a related business or practice as a proprietor, as a partner, or as a director, officer or shareholder of a corporation and may associate with a non-member for this purpose.

Guidance to Rule 408

  1. The provisions of Rule 408.1(b) requiring knowledge and compliance on the part of non-registrants to comply with respect to the governing legislation, bylaws, regulations and Code of CPABC are not intended to require knowledge of and compliance with provisions of those documents that are clearly not applicable to a non-registrant, such as payment of membership fees or completion of continuing professional development requirements.