This week, the Professional Ethics Executive Committee (PEEC) released a new exposure draft (ED) entitled, "Proposed revised interpretations and definition Loans, acquisitions, and other transactions." This proposal resulted from the PEEC's desire to converge with changes to Rule 2-01 issued by the Securities and Exchange Commission (SEC) late last year. The ED proposes changes to the following independence interpretations:
Key changes to the above rules include the following:
- Clarify the definition of "beneficially owned"
- Clarify an exemption in the client affiliates interpretation that allows a covered member to have a loan with an individual associated with an affiliate of a financial statement attest client
- Clarify the types of individuals associated with an attest whose loan with a covered member impairs independence
- Expand the types of personal loans that are permissible or may be grandfathered under the loans interpretation
- Clarify that covered members should consider the materiality of loans and financial interests held by immediate family in the aggregate when evaluating independence
- Expand the situations in which an acquisition or other transaction creates a new affiliate relationship, including incorporation of conditions that would avoid an independence impairment
Comments are due January 5, 2022.
