March 14, 2019

There have been many questions about the hosting standard that was supposed to be effective in 2018 but was delayed until July 1, 2019. At last, the Professional Ethics Executive Committee (PEEC) of the AICPA has released seven new FAQs on hosting services.

You can now watch a video as Melisa Galasso of Galasso Learning Solutions reviews in seven and a half minutes the FAQs of further guidance on her Genuine Learning Blog.

Among the seven Frequently Asked Questions About Hosting Services, there is discussion on:

  • Using third-party subscription clearinghouse to issue attest reports. Is the third-part subscription clearinghouse considered a member’s portal under the “Independence Rule”?
  • Must a member terminate a client’s access to data or records covered by the “hosting services” interpretation and relating to an engagement completed prior to July 1, 2019?
  • What is a “reasonable period” for terminating an attest client’s access to data or records within a portal after the conclusion of an engagement? (“Use your professional judgment.”)
  • Must a member terminate the attest client’s access to a return within a reasonable period after preparing and transmitting the return to avoid providing hosting services? (Yes.)
  • When a member provides recurring bookkeeping services, could having a third party’s general ledger software on the member’s server (or server leased by the member) result in the member providing hosting services to the bookkeeping client? (“Yes.”)
  • What are the actions a member can take to avoid providing hosting services to an attest client who has access to sales tax computation software on the member’s server and downloads the calculations?
  • When attest clients repeatedly ask for copies.

SCACPA is proud to partner with Galasso Learning Solutions to provide these important A&A Updates.

A May 20 Tax Deadline? House Democrats Introduce Bill for 5-Week Extension

Two Democrat Illinois Representatives introduced the Taxpayer Extension Act earlier this month that would push the individual tax-filing deadline to May 20 in support of taxpayers struggling with the new rules of the Tax Cuts and Jobs Act and to reflect the 35 days the IRS was without up to 90% of its workforce during the partial government shutdown. Reps. Sean Casten and Lauren Underwood said the delay would ease electronic traffic on the IRS filing systems, noting that last year’s filing deadline was extended one day due to daylong computer malfunctions on the payment due date.

Materiality Definition Reviewed by Auditing Standards Board

The AICPA’s Auditing Standards Board held a teleconference to discuss the definition of materiality. The AICPA’s definition is aligned with the IASB. The Financial Accounting Standards Board (FASB) updated its definition to align with the Public Company Accounting Oversight Board (PCAOB), U.S. Securities and Exchange Commission and the U.S. judicial system. Audit evidence and auditor reports for EBPs were also on the ASB’s agenda.

ASB Meeting Agenda and Materials March 2019:

Materiality Issues Paper:

Materiality Proposed exposure draft, Proposed SAS and Proposed SSAE – wording based on PCAOB:

Dept. of Labor Suggests Expansion of Overtime Threshold to $35,308

The Labor Department, acting in response to 200,000 submitted comments, has proposed a raise in the threshold for which workers are entitled to mandatory pay for working more than 40 hours in a week to an annual salary of $35,308. The current threshold of $23,660 was set in 2004, and a 2016 initiative to raise it to $47,000 has been met by heavy opposition. Under the new proposal, which would go into effect in 2020, the threshold would be re-examined every four years as opposed to automatically rising with inflation.