PEEC updates 2 ethics interpretations

By Ken Tysiac

The AICPA Professional Ethics Executive Committee (PEEC) has issued revised ethics interpretations addressing state and local government client affiliates and provision of information system services to attest clients.

If you audit reports on the financial statements of state or local governments, you must consider your independence responsibilities when it comes to affiliates of your clients. PEEC updated the previous state and local government interpretation in the AICPA Code of Professional Conduct to clarify those requirements.

The interpretation issued Tuesday, “State and Local Government Client Affiliates:

  • Clarifies examples of state and local government entities for the purposes of the standard.
  • Changes the language in the standard in numerous places to refer to “financial statement attest client” rather than “state or local government entity.”
  • Clarifies the definitions of “investor” and “investment” for the purposes of the standard.
  • Clarifies the circumstances or relationships that create threats to independence.

The interpretation is effective for years beginning after Dec. 15, 2020.

Information systems services

The “Information Systems Services” interpretation addresses self-review and management participation threats to compliance with the Independence Rule when a member provides nonattest services related to an attest client’s information systems.

For various tasks related to provision of information services, the interpretation describes when independence may be impaired.

The revised interpretation is effective Jan. 1, 2021, and early implementation is allowed.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

SPONSORED REPORT

2019 State of Financial Reporting Survey

We surveyed nearly 600 finance and accounting professionals on their month-end close and reporting processes. See the results.

VIDEO

What RPA is and how it works

Robotic process automation is like an Excel macro that can work on multiple applications, says Danielle Supkis Cheek, CPA. RPA can complete routine, repetitive tasks such as data entry, freeing up employee time from lower-level chores.