AICPA PEEC Addresses Attest Client Fees and Ethics in Professional Education
The AICPA Professional Ethics Executive Committee (PEEC) recently approved revisions to align the Code of Professional Conduct (the Code) with international standards on attest client fees as well as clarify members' ethical responsibilities when collaboration for professional qualifications and competencies oversteps into cheating.
Fees and Auditor Independence
In response to a recent International Ethics Standards Board for Accountants (IESBA) project related to fees, PEEC's ongoing efforts to significantly converge the Code with IESBA standards resulted in new and revised interpretations.
IESBA’s fees project is intended to clarify the fees and pricing practices of professional accountants and ensure consistency with the fundamental principles of its code, particularly regarding auditor independence. In 2021, IESBA adopted related changes, which became effective in December 2022.
After an exposure period of proposed changes earlier this year and a review of comments, PEEC approved the following new interpretations to align the Code with that of IESBA:
- The "Determining Fees for an Attest Engagement" interpretation (ET sec. 1.230.030) is intended to ensure that fee determination for an attest client is not influenced by other services provided to the client. The new interpretation makes clear the attest fee is a standalone fee in the spectrum of total fees for an attest client.
- The "Fee Dependency" interpretation (ET sec. 1.230.040) addresses the self-interest and undue influence threats created when fees from an attest client represent a large proportion of a firm's fees. The new interpretation offers guidance for firms and covered members to evaluate and address the threats to independence created when fees from an attest client represent a large proportion of the fees of the firm.
Now, covered members need to include these fee-related considerations in independence evaluations both at the firm level and for each attest engagement. If a fee dependency continues for five years, members will need to put safeguards in place for the affected engagements.
PEEC has updated examples of threats in the "Conceptual Framework for Independence" (ET sec. 1.210.010). The "Client Affiliates" interpretation (ET sec. 1.224.010) is revised to clarify which affiliates are included in the fee-dependency requirements.
All changes will be effective Jan. 1, 2025, with early implementation allowed. For more information, see the official release and the PEEC August open meeting agenda, including the full text of comment letters.
Professional Qualifications and Competencies
In addition, to clarify members' ethical responsibilities when collaboration for professional qualifications and competencies oversteps into cheating, PEEC revised related interpretations.
Formerly called "Solicitation or Disclosure of CPA Examination Questions and Answers," the revised interpretation "Professional Qualifications and Competencies" (ET sec. 1.400.020, 2.400.020, and 3.400.020) broadens the scope from the CPA Exam to all activity associated with acquiring and maintaining qualification and competency.
These changes are effective today. For more information, see the official release and PEEC August open meeting agenda, including the full text of comment letters.