At its November 2018 open meeting, the AICPA's Professional Ethics Executive Committee (PEEC) adopted new and revised rules in the Code of Professional Conduct:
- Revised interpretations under the “Independence Rule” (ET sec. 1.200.001)— “Leases” (ET sec. 1.260.040) and a related revision to “Client Affiliates” (ET sec. 1.224.010)
- New interpretation under the “Confidential Client Information Rule” (ET sec. 1.700.001)— “Disclosing Information in Connection with a Quality Review” (ET sec. 1.700.110)
The Leases interpretation updates the independence guidance in the code that applies when a covered member in a firm or the firm has a lease arrangement with an attest client. PEEC revised that standard due to significant changes to the FASB's lease accounting standard. The existing guidance is based on whether a lease is a capital or operating lease, concepts that will no longer exist when the new lease accounting standard becomes effective. A related revision was made to the Affiliates interpretation to address certain leasing situations.
The Leases interpretation is effective for fiscal years beginning after December 15, 2019; early implementation is allowed.
The PEEC also released a new interpretation under the Confidential Client Information Rule to permit members to disclose confidential information in connection with a tax practice quality review without obtaining client permission if certain conditions are met. This interpretation is effective on the last day of the month in which it's published in the Journal of Accountancy.
The rules release is available here.