Ep. 21: Independence in plain English

September 21, 2020

Listen as staff of the AICPA Professional Ethics Division discuss updates since 2017 to the Plain English guide to independence. You'll hear about hosting services, information system services, and new SEC guidance, among other topics.

Go to aicpa.org/plainenglishguide to access the guide.

If you have questions about the substantive content of this episode, please call the ethics hotline at 888.777.7077 (option 2, then option 3) or email ethics@aicpa.org.

If you’d like to suggest topics for future episodes, please email ethicallyspeaking@aicpa.org.


Intro: Welcome to ethically speaking the podcast of the AICPA Professional Ethics Division. The Plain English guide to independence is a handy and accessible resource for understanding the ins and outs of independence. In this episode, Ellen Gloria, associate director of the division, and Liese Faircloth, one of our independence and behavioral managers, discuss important updates in the newly released version of the guide.

Liese Faircloth: Hi, I'm Liese.

Ellen Goria: Hi I'm Ellen. We wanted to talk to you a little today about the plain English guide to independence on the guide. It was just updated. And so we wanted to let you know about some of the new things that you'll find in this latest version as far as like, why you should be interested in taking a look at the plain English guide to independence.

Although it is not authoritative, what it does is it allows staff to do a couple of things. The first thing is it allows us to kind of explain the independence rules to you in a less techie fashion. It also allows us to incorporate some guidance that you wouldn't find in the code. So for example, when you're reading a particular topic in the plain English guide, you might see some guidance from another regulator in there as well. So you'll see some guidance from like the SEC. So it kind of pulls it all together for you by topic so that folks find really helpful. Another thing that we incorporate into the guide that you wouldn't find in the code. It's just kind of like non authoritative information that just wouldn't have a place in the code itself.

One example that comes to mind for me is when we were developing the client affiliates guidance, we developed some visual aids that helped folks understand the scope of the guidance and you know what entities would be considered an affiliate of your client. And so we were able to include those visual aids into the guide. So that's a sense of the, the kinds of things that you'll find in the guide and why I think it's a real great document for you guys to look at. You want to go to aicpa.org/plainenglishguide.

But with that, I'm going to turn it over to Liese, who has just finished doing the update to the guide it hasn't been updated since 2017 so there's a bunch of new information that I believe you'll find helpful.

Liese Faircloth: Thanks, Ellen. So the first thing I wanted to mention is that the guide been updated for advances in technology. So much has changed since the last edition of the plain English guide. The first topic would be hosting. We talk about the interpretation that I hope most practitioners are aware of and we provide information and examples of when hosting is happening and when it's not as well as links to some frequently asked questions that practitioners have asked on the hotline. And so we want to provide those answers as well.

We also provide some information on the new information services interpretation that has just recently been issued and goes into effect in January. It walks through what practitioners now are not allowed to do and provides safeguards so that if they are providing these types of services, they’re not impairing their independence.

Ellen Goria: One thing I wanted to also mention for those of you that maybe haven't heard about the hosting services interpretation and are looking for some additional information on hosting.

We did record three ethically speaking episodes. So again, if you go to aicpa.org/ethicallyspeaking look for episodes, 3, 4, and 12 and those episodes will all discuss hosting in even more detail.

Liese Faircloth: Thanks, Ellen. We also added to the guide for international convergence. AICPA does try to keep our standards in line with the international standards setters. And so we put in some information about how long, long serving members on an engagement team may affect the independence of the engagement team or the firm performing the attest services.

We also have some information linking to general FAQs. That's part of that discussion if people have questions, they might find the answers in those FAQs.

Additionally, we looked at one area of focus and we discussed how practitioners are able to assist their clients with implementing new accounting standards without impairing their independence.

I'm sure a lot of practitioners have been getting questions about FASB 606 and want to make sure they're not impairing their independence, when they assist their clients with implementing that standard as well as any new standards that are coming.

Ellen Goria: That that has been a real hot item as well. And so again if after looking at the guide, you want to get some more information in even greater detail. I’d also suggest you listen to Ethically Speaking episodes 9 and 10 as they discuss 606 and again you'd get that at AICPA.org/ethicallyspeaking and look for episodes 9 and 10.

Liese Faircloth: The last big area that we've provided updates to was some of the SEC differences that we call out. Because we're not experts in SEC guidance, we don't cover that guidance in depth. We just try to call out some of the differences between the AICPA and SEC guidance. So there's some new information there related to the new loan fool that the SEC recently released as well as some new FAQs related to nonattest services. So you may want to check those things out as well.

Liese Faircloth: So Ellen, do you have anything else?

Ellen Goria: No. I think that's it. Again, aicpa.org/plainenglishguide to take a look at the most recent 2020 version of the Plain English guide to independence.

Liese Faircloth: Thanks for listening. If you have questions about the technical content of this episode. Call us at 888.777.077 option 2 and then option 3.

If there are other topics that you'd like to see us cover in future episodes shoot us an email at ethicallyspeaking@aicpa.org. You can find links to the resources we mentioned on the show notes page for this episode.