July 15, 2016 RECENT DEVELOPMENTS
The AICPA Professional Ethics Executive Committee (PEEC) held an open meeting on 7/12. Highlights of the meeting follow:
Actions taken by the PEEC:
- Unanimously agreed to adopt a proposal that requires members to disclose permissible commission or referral fee arrangements to clients in writing with a delayed effective date of January 31, 2017.
- Unanimously agreed to adopt, with revisions, proposals related to the transfer of files and return of client records when members sell, transfer, discontinue, acquire or merge an accounting practice.
The PEEC also:
- Provided feedback to the task force examining the “client” and “attest client” definitions in the Code.
- Agreed to form a task force to study whether to amend the code’s independence provisions for nonattest services to address cybersecurity-related advisory services.
- Directed the leases task force to proceed with option #2 described in the agenda, that is:
- Revise the independence interpretation to conform to new language in the FASB lease standard, i.e., change “capital lease” to “finance lease” and continue to treat these transactions as loans.
- Add short term leases to the provision for operating leases and require these transaction be in the normal course of business, under usual terms and conditions, and immaterial to the firm and the lessor.
- Provided feedback to a convergence task force examining Part C of the International Ethics Standards Board for Accountants (IESBA) Code revamp of certain provisions for accountants in business.
- Provided feedback and generally agreed with the direction being proposed by another convergence task force regarding a new IESBA standard termed “NOCLAR” – which stands for noncompliance with laws and regulations.
- The PEEC’s cloud computing task force is in the process of defining various IT related terms (e.g. off-the-shelf software and configuration) and considering revisions to the PEEC’s FAQs on IT services. The task force will present comments received on the exposure draft on hosting services and its proposals at the next PEEC open meeting.
- IESBA activities, including an IESBA task force’s response to comments on the re-exposure of the “long association” provision (i.e., partner rotation).
- A draft nonattest services independence tool kit for the PEEC’s consideration.
The Open Meeting Agenda is available here. The next PEEC meeting is scheduled for November 3-4, 2016 in Austin, Texas.