Pub. 1 2019 Issue 5

S E P T E M B E R / O C T O B E R 2 0 1 9 12 nebraska cpas In July 2017, the Professional Ethics Executive Committee (PEEC) of the AICPA issued an ethics interpretation (ET §1.295.143) relating to hosting services provided to attest clients. When many people hear the term hosting, they think software as a service, but that is not the definition of hosting per the ethics standard. The interpretation had an original effective date of September 2018. Due to issues with firms not being ready to implement the standard, PEEC extended the effective date to July 1, 2019. The delay in the effective date was helpful to many CPA firms in Nebraska, and across the country, due to many not being fully aware of the changes that need to be implemented to maintain independence. You may be affected and not know it! According to the PEEC, they felt it necessary to address ethics as it relates to the changing landscape of technology and how CPA firms interact with their clients. In addition, there was no previous guidance to address the issue of clients asking CPA firms to “keep their stuff.” As firms serving small to mid-size businesses, we take pride in being a trusted advisor. However, we also need to be careful we are not allowing our clients to rely on us too heavily in areas that could impair our independence. As of July 1, 2019, hosting impairs independence. Hosting Services What exactly are hosting services? Non-attest services that involve a member accepting responsibility for the following: • Acting as the sole host of a financial or non-financial information system of an attest client. • Taking custody of or storing an attest client’s data or records whereby that data or records are available only to the attest client from the member such that the attest client’s data or records are otherwise incomplete. • Providing electronic security or backup services for an attest client’s data or records. What does this mean for you? Any schedules or calculations prepared by the CPA must be provided to the client so that their books and records are complete. This includes tax returns as well as depreciation and amortization schedules and functional expense calculations for nonprofits. If the client is changing service providers and they have to come to you to get information for their newCPA in order for that firm to provide services, then you are likely providing hosting services. SURPRISES IN THE NEW HOSTING BY SUSAN STUTZEL & MELISA GALASSO