Recently, the AICPA Professional Ethics Executive Committee (PEEC) released a new interpretation of “Hosting Services” under “Non-Attest Rules” in the AICPA Code of Professional Conduct‘s “Independence Rule” (ET §1.295.143).
Under the new rule, which applies to CPAs providing non-attest services to attest clients, hosting services can impair independence when a CPA takes responsibility for maintaining internal control over a client’s data or records.
NCACPA reached out to the NC State Board of CPA Examiners for comment, and the Board advised CPA firms ensure the services they provide clients are not purely “hosting” services, whereby the CPA firm could be discerned as having management oversight or discretion on the workings of the entity. As an example, if a firm has clients using QuickBooks on their portal or is preparing depreciation schedules on behalf of the client, the firm is advised to ensure client records are made whole and complete by ensuring the client has copies of their end product, meaning the “hosting” event was a process to a result, and not a process separate from client interaction.
This article on the Journal of Accountancy expands on implications and scenarios of the new ruling.