AICPA Board Releases Exposure Draft for Leases Interpretation
The American Institute of Certified Public Accountants’ (“AICPA”) Professional Ethics Executive Committee (“PEEC”) has issued an exposure draft, Proposed Revisions to the AICPA Code of Professional Conduct: Leases Interpretation, which proposes updates to the independence guidance for leases under the Code of Professional Conduct.
The proposed amendments relate to Accounting Standards Update No. 2016-02, Leases, which was released last year by the Financial Accounting Standards Board. Upon the standard’s release, the PEEC assumed a project to review its leases interpretation. After its review, the PEEC agreed to update the interpretation for consistency and to address situations that could threaten independence.
The exposure draft offers guidance for situations wherein a covered member enters into a lease with an attest client due to concerns that self-interest, familiarity, and unwarranted influence threats to the member’s accordance with the PEEC Independence Rule (ET section 1.200.001) may occur. It also features conceptual framework that includes factors for determining potential threats to objectivity and skepticism.
The proposed changes would impact all leases between attest clients and covered members except car leases with lending institution attest clients, and the requirements concern certain related parties. Exceptions are also provided for certain grandfathered leases and certain leases of primary residences from attest clients.
Comments on the exposure draft are due Wednesday, December 20. If approved, the amendments would be effective simultaneously as the leases standard’s effective date for private companies, which are leases entered into after December 15, 2019.
Topics: Accounting Standards Update "ASU", AICPA Code of Professional Conduct, AICPA Exposure Draft, AICPA Professional Ethics Executive Committee, FASB, Financial Accounting Standards Board "FASB", lease accounting