When standard-setters issue exposure drafts, it is more than a formality. They are asking for help determining whether proposed standards will work in practice. The PICPA takes our obligation to advocate for the profession very seriously.
For the standard-setting process to work – and work well – stakeholder participation is essential.
When standard-setters issue exposure drafts and other due-process documents, this step is more than a formality announcing a potential new requirement. They are asking CPA practitioners, business leaders, regulators, investors, and other stakeholders to help identify unintended consequences and determine whether proposed standards will work in practice. Thoughtful stakeholder input helps ensure that final standards are rigorous and serve the public interest, while also being understandable, practical, and capable of consistent implementation.
When people hear the word “advocacy,” they often immediately think of legislative action. But advocacy is not so limited. Advocating a position with regulators can be just as impactful.
A recent change to the AICPA Code of Professional Conduct provides an excellent example of why advocacy during this process matters.
Monitoring an Emerging Issue
The AICPA Professional Ethics Executive Committee (PEEC) issued an exposure draft in June 2024 that proposed revisions to its independence guidance for tax services provided to attest clients. The project was part of PEEC's broader efforts to better align with international ethics standards.
The PICPA had already been monitoring new requirements and guidance coming from the International Ethics Standards Board for Accountants (IESBA) that addressed tax planning and related services. Among other provisions, the international standard established a principle that professional accountants should recommend or advise on a tax planning arrangement only when there is a credible basis in laws and regulations. It also introduced guidance addressing broader considerations surrounding tax planning, including potential reputational, commercial, and economic consequences; stakeholder perceptions; the effect of arrangements across multiple tax jurisdictions; and, in certain circumstances, disclosure to taxing authorities.
These concepts raised important questions about how international requirements might translate into the U.S. marketplace. So, the PICPA continued to monitor the AICPA's standard-setting activities, with a focus on ensuring that international harmonization did not inadvertently result in unnecessarily burdensome requirements that would be difficult to apply within the U.S. legal and regulatory framework.
Practitioners Have an Important Voice
Once PEEC released its exposure draft, the PICPA engaged members of its Ethics Committee and subject-matter experts in taxation to evaluate the proposal from a practical perspective.
There was broad agreement on an important underlying principle: providing tax advisory and planning services to an attest client can create threats to independence. The ethics standards, therefore, should provide practitioners with an appropriate framework for identifying and evaluating those threats.
The biggest concern we identified was not with that objective, but rather with how a particular aspect of the proposed standard would work in practice.
The proposal incorporated a more-likely-than-not threshold into the evaluation of whether certain tax services would impair independence. Our experts questioned whether such a bright-line threshold was appropriate for the wide range of circumstances practitioners encounter when evaluating tax positions.
Although more-likely-than-not thresholds have applications elsewhere in professional standards, tax law frequently involves uncertainty, competing interpretations, evolving authority, and highly fact-specific judgments. A single quantitative threshold could therefore produce unintended consequences or unnecessarily restrict legitimate tax advisory services without necessarily strengthening auditor independence.
The PICPA recommended a more nuanced, principles-based approach that would allow practitioners to evaluate the relevant facts and circumstances, including applicable tax law and the positions of relevant taxing authorities.
Advocacy Made a Difference
PEEC listened.
Based on the feedback received through the exposure process – including concerns raised by the PICPA and other stakeholders – the final guidance moved away from the proposed bright-line approach and adopted a more principles-based framework.
The revised interpretation – which becomes effective Jan. 15, 2027 – continues to reinforce the fundamental objective: firms must carefully consider whether providing tax services to an attest client creates threats to independence and appropriately address those threats. But it does so through an approach that better recognizes the complexity and judgment inherent in tax practice.
This is an important outcome, but there is an even bigger lesson.
Standard-Setting Is Not a Spectator Sport
It can be easy to view an exposure draft as simply another technical document or assume that a proposed requirement will inevitably become the final standard. But neither is truly the case.
And that is precisely why advocacy matters.
Standard-setters need, and want, practitioners and other stakeholders to explain how proposed requirements will operate in the real world. They need to hear where language may create ambiguity, where a seemingly reasonable requirement may produce unintended consequences, and where an alternative approach could achieve the same public-interest objective more effectively.
Effective advocacy, however, is more than submitting a comment letter after a proposal is released. It requires continuous engagement:
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Monitor emerging issues and standard-setting projects before they reach the proposal stage.
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Engage practitioners and subject-matter experts who understand how proposed requirements will work in practice.
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Evaluate proposals against their intended objectives and identify potential unintended consequences.
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Advocate for solutions that protect the public interest while remaining practical, scalable, and understandable.
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Follow through to determine how stakeholder feedback affected the final standard and what practitioners need to know to implement it.
The example of the PEEC proposal demonstrates the value of the process. The PICPA did not advocate against strong independence standards; we advocated for a standard that could achieve its objective more effectively.
That’s an important distinction.
Good advocacy is not about opposing regulation or resisting change. It is about bringing practical experience into the standard-setting process so that policymakers and standard-setters can make better-informed decisions.
When practitioners participate, standards get better. When professional organizations bring together the experience of their members and subject-matter experts, individual voices become considerably stronger.
That is why the PICPA continually monitors emerging professional issues, engages our members, and speaks up when proposed standards could affect the profession and the public it serves.
Advocacy isn't separate from the standard-setting process. It is an essential part of making that process work.
As PICPA vice president of professional and technical standards, Allison Henry regularly shares her thoughts on PICPA’s advocacy efforts and the standards-setting process. Check out some of her recent contributions:
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Our Standard Behind the Standards: The Invisible Work of Advocacy
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PICPA Powers an Early Warning System for the Accounting Profession
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