PEEC seeks feedback on guidance for providing tax services to attest clients

The AICPA Professional Ethics Executive Committee (PEEC) issued an exposure draft proposing revisions to the “Tax Services” interpretation (ET §1.295.160). This proposal is part of PEEC’s ongoing effort to harmonize with the ethics standards set by the International Ethics Standards Board for Accountants (IESBA).

Why this exposure draft is being issued

The ED’s primary goal is to address potential threats to independence when members perform tax advisory and tax planning services for attest clients. The revisions aim to enhance the AICPA Code of Professional Conduct by providing more specific guidance on identifying and evaluating self-review and advocacy threats to independence.

Effects on practice

If adopted, the revised interpretation will affect how AICPA members provide tax advisory and tax planning services. The proposal introduces a principles-based approach, allowing members to use their professional judgment to determine whether the services performed may result in significant threats to independence. This approach is designed to strike a balance between serving attest clients and maintaining independence, ensuring that members can continue to provide valuable and trusted tax services while upholding ethical standards.

Feedback on the original proposal

PEEC issued its first ED on this project in June 2024. Though many commenters supported the introduction of the “more likely than not” likelihood of success threshold for independence, others argued that other thresholds, as defined by IRS regulations, may be more appropriate for privately held attest clients.

In response to conflicting views, PEEC is proposing to eliminate any specific threshold and adopt a principles-based approach instead. The proposal includes examples of factors to consider, including likelihood of success, when members exercise their professional judgment to evaluate threats to independence. This change aims to address commenters’ concerns and provide a more flexible framework for evaluating threats to independence.

The comment period for the new ED ends Dec. 15. PEEC welcomes and carefully considers all feedback from members and other interested parties.

To facilitate feedback, the AICPA Professional Ethics Division provided a fillable PDF, though the PDF is not required to submit comments. Email all comments to ethics-exposuredraft@aicpa.org.

— Kelly D. Mullins is the communications manager for the AICPA Professional Ethics Division. To comment on this article or to suggest an idea for another article, contact Neil Amato at Neil.Amato@aicpa-cima.com.