The AICPA Professional Ethics Executive Committee (PEEC) held an open meeting on November 16, 2021. Highlights from the meeting follow:
- PEEC reviewed the latest version of the Noncompliance with Laws and Regulations ("NOCLAR") interpretations and the NOCLAR Task Force's recommendations based on comments received on the proposal. PEEC suggested certain edits but largely agreed with the Task Force's recommended changes and plans for developing nonauthoritative guidance. PEEC will review the updated interpretations at its next open meeting in February 2022.
- PEEC agreed to adopt a temporary enforcement policy (as edited) to address simultaneous employment with attest clients by members of the military. PEEC also agreed to appoint a task force to consider possible changes to the AICPA Code of Professional Conduct for this and potentially other similar situations.
- PEEC agreed to continue to defer the effective date of the Information Systems Services interpretation (ISS) for an additional year due to an apparent misunderstanding of certain provisions, in particular, the application of the revised provision to managed services and which activities constitute prohibited management responsibilities. The deferral will allow the Ethics Division to conduct member outreach and education via roundtable discussions, the results of which will be communicated to PEEC at its August 2022 open meeting. In the meantime, the Ethics Division will release an ISS Practice Aid and the ISS Task Force will continue to develop several scenarios that illustrate application of the revised rule.
- The Client Affiliates Task Force presented its recommendations for addressing the question of whether an individual associated with a financial statement attest client should be considered an affiliate subject to the independence rules. The Task Force recommended the Ethics Division publish a frequently-asked-question ("FAQ" - i.e., nonauthoritative guidance) rather than proceed with a possible rule change. The FAQ provides criteria that, if met, would prompt the member to apply the Conceptual Framework for Independence to evaluate the significance of the threat(s) and whether safeguards could adequately address such threat(s). PEEC agreed with the task force's recommended action and that the task force and Ethics Division could move forward with publishing the FAQ.
- PEEC agreed that the Confidentiality and Data Security Task Force should expand the scope of its charge to address a member's obligations under the Code when a data breach occurs.
- PEEC agreed that the Compliance Audit Task Force should expand the scope of its charge to include additional considerations related to the treatment of compliance audits within the independence rules, e.g., whether to exclude compliance audits from the definition of "financial statement attest client" and whether independence standards should apply to clearly inconsequential entities in a compliance audit.
- PEEC heard an update on PEEC and Ethics Division projects and the International Ethics Standards Board for Accountant's (IESBA's) most recent and upcoming activities.
PEEC's next open meeting is scheduled for February 16, 2022.