Ethics exposure drafts explained; the makings of a good cover letter

Several ethics-related exposure drafts are in focus in this week’s episode. Toni Lee-Andrews, CPA, CGMA, the director of the AICPA’s Professional Ethics Division, shares details on three upcoming EDs, a timeline for comments to the drafts, and more about the division’s streamlined comment process. Lee-Andrews also previews two recent episodes of the division’s Ethically Speaking podcast. Visit aicpa.org/ethics for more ethics resources.

Plus, get a refresher on what makes a good cover letter, and keep up with top recent news in the Journal of Accountancy.

What you’ll learn from this episode:

• A summary of three soon-to-be-issued exposure drafts from the Professional Ethics Executive Committee.
• The ways that the comment process has been simplified.
• A preview of several recent episodes on the Ethically Speaking podcast.
• More on the recent CPA Insider article “How to Write Cover Letters That Stand Out.”
• News on tax provisions, modifications to EIDL loans, and W-2 reporting guidance.

Play the episode below or read the edited transcript:

To comment on this podcast episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: Welcome to the Journal of Accountancy podcast. Today’s episode leads off with a discussion on several ethics-related topics. You’ll hear those right after this brief sponsor message.

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Amato: This is Neil Amato, a senior editor with the Journal of Accountancy. Joining me on today’s episode is Toni Lee-Andrews, the director of the AICPA’s Professional Ethics Division. Toni is a CPA who holds the CGMA designation. Toni, welcome to the podcast. First, could you summarize the three recent exposure drafts that PEEC, the Professional Ethics Executive Committee, has put out?

Toni Lee-Andrews: Hi, Neil, and absolutely. One of the exposure drafts is the accounting standards implementation services. PEEC decided to take this project underway given the increased complexity of accounting standards today. So this is a new interpretation that provides guidance on how independence could be impacted when a member assists an attest client with not only implementing existing accounting standards but also new accounting standards. The [AICPA Code of Professional Conduct] already provides guidance around this. But PEEC felt that having a dedicated interpretation, combining key elements from existing nonattest services interpretations, would help members understand and have a greater level of compliance.

We also have an unpaid fees interpretation. PEEC took this on to develop a principles-based framework for members to use when unpaid fees impair independence. This is also a convergence project. We are tasked with converging with other standard setters, such as the IESBA, which is the International Ethics Standards Board for Accountants and the SEC, the Securities and Exchange Commission. Also in that interpretation, there’s a determination about whether the current bright line on a one-year approach continues to be appropriate, especially given the times that we are in today and the COVID-19 pandemic.

Then we have a third exposure draft, which is an SEC convergence project, which is loans and acquisitions and other transactions. Back in October of 2020, the SEC approved amendments to certain auditor independence requirements, and those were effective this past June. Those rules really modernized the independence rules, made the independence analysis focused more on relationships and services that might pose threats to objectivity and impartiality. So, PEEC is proposing several revisions in terms of student loans and consumer loans, replacing references to some terminology, clarifying some definitions, and giving additional guidance in that interpretation.

Amato: When people hear “exposure draft” and things such as “comment period” or “comment letter,” it seems to me sometimes they can be intimidated by the formality of it all. How is that comment process getting easier?

Lee-Andrews: That’s a great question, because I think a lot of people think from time to time that if they have feedback or comments or even if PEEC has specific questions that they’re looking for input on, that they have to have a formal, written comment letter. But we’ve got an exciting new direction for both, letting people know about the exposure drafts as well as how to comment on them. So we’re starting, with these exposure drafts, a podcast for each one, where the task force chair is going to talk about who is affected, how practice is going to be effected, specific questions that PEEC is seeking input on, and then why PEEC thinks the guidance is necessary.

Then the comment process — you can still submit that formal comment letter as a lot of firms do. But you can also email. You can email us at ethics-exposuredraft@aicpa.org. And our newest way is to complete our online form. It’s online, complete, submit comments, answer questions. It doesn’t have to be, as you mentioned, that intimidating, formal process as it has been in the past.

Amato: For the listeners, what is the deadline for commenting on those drafts?

Lee-Andrews: We are hoping that the exposure drafts will be issued within the next couple of weeks. Comments will be due 90 days after the date of the exposure draft.

Amato: You mentioned the podcast episode specifically tied to those exposure drafts. The podcast is called Ethically Speaking. We’ll mention that podcast again at the end of this interview. At the recent AICPA & CIMA ENGAGE 2021, a Q&A session showed some areas of member interests. I guess tell the listeners about that session and what stood out to you.

Lee-Andrews: It was a really great session, and several questions came up during the session. We actually had a participant ask to receive the questions that were asked during the session. So we recently recorded two podcasts as a follow-up to that engage presentation. We call it our encore version. Those episodes address questions such as, how did the rules in the code of conduct get changed? Is enforcement always punitive? Which, the answer that is not at all; our goal is always to bring members back into compliance with standards.

When are our practice aids coming out? All sorts of questions like that. You can find those questions and answers in that encore version of the Ethically Speaking podcast. They are Episodes 30 and 31, and those can be found at aicpa.org/ethicallyspeaking. I also want to mention to be sure to subscribe so that you’ll be notified when new episodes are published.

Amato: Great, Thank you. This has been an excellent conversation. Again for listeners seeking more on the ethics front, visit aicpa.org/ethics. And as mentioned, the podcast Ethically Speaking — you can find it by searching for that phrase in your favorite search engine or by finding a link in this episode’s show notes. Toni, thank you for being on the podcast today. Anything to add in closing?

Lee-Andrews: Just in speaking about those podcasts, be on the lookout for our “Back to the Basics” series. We’re hoping to start those toward the end of this year. That’s going to be a really interesting series that’s going to take you back to the fundamentals, cover some general and technical standards, the integrity and objectivity rule, and also what not to do, avoiding some pitfalls and keeping it real.

Amato: Again, that was Toni Lee-Andrews, the director of the AICPA’s Professional Ethics Division. In the show notes for this episode, on the Journal of Accountancy page, you’ll find a host of ethics-related content.

Our next topic is from a headline in a recent CPA Insider article. The headline: “How to Write Cover Letters That Stand Out.”

Those of us who have applied for jobs may have struggled with exactly what to say about ourselves in a cover letter, and those of us who’ve hired for open positions probably recall some memorable cover letters, both the good and the not so good. In the age of automation, some may question the value of a cover letter. But that complementary document to the résumé isn’t dead yet, and a concise, well-written cover letter can be the difference between getting a call back or not.

We will link to the article on standout cover letters in the show notes for this episode.

In other news, the House Ways and Means Committee on Sept. 13 released a list of tax provisions for the budget reconciliation bill. It’s a voluminous text, and Alistair Nevius shares highlights of the proposed changes, which would raise tax rates for corporations and individuals and make many other changes to the Internal Revenue Code.

The U.S. Small Business Administration released several COVID-19 EIDL program modifications designed to make it easier for restaurants and other businesses particularly hard hit by the pandemic to take out EIDL loans, that being EIDL, which stands for Economic Injury Disaster Loans.

And finally, the IRS has issued W-2 guidance for 2021 sick and family leave reporting. The guidance details how employers must report qualified sick leave wages and qualified family leave wages for leave provided to employees.

Again, those items will be linked in the show notes for this episode. Thank you for listening to the Journal of Accountancy podcast.