NASBA and State Boards Respond to PEEC

State Boards of Accountancy, along with NASBA, provided tremendous response to the AICPA’s Professional Ethics Executive Committee (PEEC) Exposure Draft: Proposed Revisions related to Alternative Practice Structures (APS). Of the 81 comment letters PEEC received on the exposure draft, over a third of them came from NASBA and the state boards. The common themes in the NASBA and state board letters were that independence in appearance was not sufficiently addressed and the exposure draft was overly complex to be applied and enforced consistently.

After considering the comment letters to the exposure draft, the PEEC APS Task Force presented its recommendations at the PEEC meeting on August 4-5, 2026, which has resulted in a re-write of the exposure draft.

Some of the key changes to the proposed revised interpretation include:

An investor with control is automatically a network firm. Cooperation is no longer a precondition.
“Closely aligned entity” replaces “nonattest entity” for broader applicability to address the attest firm’s dependency on another entity rather than whether the entity performs non-attest professional services.
Significant influence or control by an investor over a closely aligned entity prohibits all attest services to any entity within the investor’s structure that the investor has significant influence over, regardless of materiality.
Expands the “investor” definition to broaden who qualifies, including investment funds, general partners and investment advisers.

PEEC will continue deliberations on the proposed revised interpretation and will convene a special meeting in October with an expected vote on releasing a second exposure draft with a 120-day public comment period. Should the anticipated dates hold true, this would give interested parties until approximately mid-February 2027 to comment on the second exposure draft.

NASBA encourages state boards to once again be active in responding to this important issue. Your voice does make a difference. NASBA is committed to helping state boards get the information they need to respond to the second exposure draft.