This week, the AICPA published two independence proposals - a proposed new interpretation, Accounting Standards Implementation Services, and proposed revised interpretation, Unpaid Fees.
Accounting Standards Implementation Services
The explanatory section of the proposed new interpretation provides key considerations from the AICPA Code of Professional Conduct, e.g., avoidance of management responsibilities and existence of a willing and able / competent person to make decisions for the client when a firm helps its attest client with the implementation (i.e., planning and execution) of new or existing accounting standards. The proposed interpretation notes that helping an attest client implement an accounting standard may create self-review or management participation threats. The interpretation then provides examples of nonattest services that are permissible, for example:
- developing and providing training to attest client personnel on the effects of the standard
- assisting management in drafting implementation strategies or methods used to implement the accounting standard
- providing recommendations related to existing or new information technology systems
Services that would be impermissible include:
- leading an implementation project team at the attest client
- making decisions on how to implement the accounting standard
- setting policy or procedures related to the accounting standard
Proposed effective date: 90 days after publication in the Journal of Accountancy
Unpaid Fees
As described in the explanation for this proposal, the PEEC is seeking to propose revisions to provide a principles-based framework (framework) to evaluate when unpaid fees may impair independence. Currently, the interpretation provides a "bright line" test. The proposal would also:
- remove the reference to an advocacy threat, which PEEC believes is not relevant to unpaid fees
- provide factors to consider when evaluating whether threats to independence are at an acceptable level under the framework
- provide examples of possible safeguards to eliminate threats to independence or reduce threats to an acceptable level
Proposed effective date: 6 months after publication in the Journal of Accountancy (earlier implementation permitted)
Comments on both proposals are due December 20, 2021.
