Peer Review Training: Applying the Existing Independence Guidance in Alternative Practice Structures

Applying the existing alternative practice structure (APS) guidance when a CPA firm is in an APS with a closely aligned non-attest entity complicates the independence analysis.

The APS interpretation (ET section 1.220.020) within the AICPA Code of Professional Conduct, along with other relevant interpretations, such as for networks and network firms, provides the authoritative framework for navigating these arrangements. Peer reviewers should know how to apply it effectively now until the new guidance takes effect.

This training breaks the existing APS interpretation down paragraph by paragraph, giving peer reviewers the tools they need to assess APS engagements with confidence.

It begins with the threshold question every reviewer must ask first: Does the firm meet the definition of an APS? From there, it walks through the covered member analysis, which extends beyond the traditional CPA firm to include employed and leased individuals associated with the non-attest entity.

Reviewers will explore how to evaluate direct and indirect superiors based on their ability to influence and how to determine whether CPAs retain ultimate responsibility for attest services in substance. The training also addresses relationships and circumstances in which independence is impaired, as well as those that are permitted.

Other relevant interpretations are also covered, including the application of the code’s network firm guidance and the conceptual framework.

Throughout, the focus remains practical:

• What questions should reviewers ask?
• What evidence should they look for?
• How should conclusions be documented?

Every expectation is grounded firmly in the current, authoritative guidance. While new APS guidance is being developed, this training ensures that reviewers are fully equipped to apply the standards governing APS reviews today.

Whether you are new to APS reviews or looking to sharpen your approach, this session provides a clear, structured path from the code's existing requirements to well-supported peer review conclusions.

Key Topics

• ET section 1.220.020 — the existing APS interpretation
• Alternative practice structure definition and applicability
• Covered members in an APS environment: Direct vs. indirect superiors
• Network and network firms
• Financial interests and other relationships
• Independence threats
• Evidence-based peer review documentation

Learning Outcomes

• Identify the characteristics that distinguish an alternative practice structure (APS) from other firm arrangements under ET section 1.220.020.
• Determine whether the APS interpretation applies to a firm under review by analyzing the relationship between the attest firm and the non-attest entity and the investor and the non-attest entity.
• Differentiate between direct and indirect superiors based on their ability to influence attest firm engagements, rather than job title or organizational chart position.
• Determine the applicability of the network and network firm guidance to an APS.
• Analyze relationships and circumstances, such as indirect superiors with financial interests in attest clients, for independence threats within an APS arrangement.
• Apply the paragraph-by-paragraph requirements of ET section 1.220.020 to formulate peer review questions, assess evidence, and document conclusions.
• Recognize the distinction between the existing authoritative APS guidance and future guidance under development.

Who Will Benefit

• Peer reviewers
• Members currently practicing in APSs