New effective date for ethics interpretation on hosting services

The AICPA also issued two technical corrections to address typographical errors.

The effective date of the new "Hosting Services" interpretation (ET §1.295.143) in the AICPA's "Independence Rule" (ET §1.200.001) has been extended 10 months by the AICPA Professional Ethics Executive Committee (PEEC).

Meanwhile, the AICPA also issued technical corrections to the definition of "covered member" in the AICPA Professional Standards and the independence rules for agreed-upon procedure engagements performed in accordance with the Statements on Standards for Attestation Engagements (SSAEs).

PEEC voted to move the effective date for the hosting services interpretation to July 1, 2019; the ethics interpretation originally was scheduled to take effect on Sept. 1, 2018. The additional time is being provided to allow AICPA members to work with their third-party vendors and clients to implement any necessary changes resulting from the new interpretation.

Although the extension provides more time for implementation, CPAs who have not addressed the need to make changes as a result of the interpretation may wish to focus on this issue now. The new interpretation to the "Independence Rule" in the AICPA Code of Professional Conduct explains that taking responsibility for hosting an attest client's data or records impairs a CPA's independence.

The AICPA staff is developing resources to assist CPAs with implementing the standard; the resources are scheduled to be available by the end of this year. Questions also can be directed to the Professional Ethics hotline via email at ethics@aicpa.org.

Technical corrections clarify previous updates. Neither technical correction issued represents a change in position on the part of the AICPA; rather, both corrections fix typographical errors that occurred when previous updates were published.

One technical correction clarifies that 10 hours is the threshold for provision of nonattest services to an attest client within a fiscal year at which a partner, partner equivalent, or manager is considered a "covered member" (ET §0.400.12) in the AICPA Code of Professional Conduct.

The other technical correction clarifies that independence would be impaired in an agreed-upon procedure engagement under the SSAEs if a firm had a material financial relationship with the responsible party or parties that was covered by any of the following interpretations of the "Independence Rule" (ET §1.200.001):

  • Paragraphs .01 and .02 of "Overview of Financial Interests" (ET §1.240.010).
  • "Trustee or Executor" (ET §1.245.010).
  • "Joint Closely Held Investments" (ET §1.265.020).
  • "Loans" (ET §1.260.010; prior reference: ΒΆ.13 of ET §101).

The technical corrections took effect immediately.

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