AICPA proposes changes in code of conduct on alternative practice structures

The American Institute of CPAs has proposed a set of revisions to its Code of Professional Conduct regarding the kinds of alternative practice structures set up by firms that have accepted private equity investment.

Processing Content

The proposed revisions include changes in the independence rule, the definition of a “network firm,” the “form of organization and name rule,” the conceptual framework for independence, the conceptual framework for members in public practice and more. The AICPA is asking for comments to be emailed to ethics-exposuredraft@aicpa.org by April 30, 2026.

The AICPA has been considering the changes all year after its Professional Ethics Executive Committee set up an Alternative Practice Structures Task Force that reached some preliminary conclusions about revising the independence rules. Earlier this month, the committee voted to seek public comment on the changes.

Among other changes, the exposure draft identifies relationships and circumstances that could impair independence and addresses factors for evaluating threats, where appropriate.

“These changes aim to uphold the integrity of the profession while offering practical guidance for firms operating in alternative practice structures,” said the exposure draft.

Among other items, PEEC is looking for comments on:

• A new version of the independence interpretation related to alternative practice structures, which describe attest firms that are closely aligned with a nonattest entity at least partly owned by investors. The proposed Code of Professional Conduct revisions would distinguish between “significant influence” and “control” by investors over nonattest entities, with guidance on how these terms affect independence assessments.

• Revisions to the “Alternative Practice Structures” interpretation under the “Form of Organization and Name Rule.”

• Revisions to the “Conceptual Framework for Independence” interpretation, a key assessment tool for complex APS situations.

• Revisions to the “Conceptual Framework for Members in Public Practice” interpretation.

• Revisions to the definition of “network firm,” a term in the Code of Professional Conduct that refers to entities subject to independence requirements for financial statement audit and review clients. The new definition would include “an entity that, by itself or through one or more of its owners a. the network firm controls, or b. controls the network firm and cooperates with the network firm for the purpose of enhancing that network firm’s capabilities to provide professional services.”

If the changes are approved next year, the proposed independence updates would be effective one year after adoption, but firms could implement them earlier.