The AICPA term “spousal equivalent” seems to be open to interpretation. Left to my own senses, I found in an internet search the Free Dictionary version of what a “spousal equivalent” is. According to the definition, a spousal equivalent is “a person (not necessarily a spouse) with whom you cohabit and share a long-term sexual relationship”. This definition leaves a lot to be desired and can be interpreted and misled in many directions. Just because one cohabitates with someone else (regardless of sexual preference), doesn’t necessarily mean that they are having sex. As Dr. Higgs mentioned in this week’s lecture, even married couples that live together don’t necessarily have sex. In addition, what is a long-term relationship? In my twenties, a long-term relationship could have been six months. Now that I’m older, I think that the same term should be measured in years. It sounds to me that by using this ambiguous definition, the AICPA is covering all bases when it comes to protecting the ET Section 101 rule of independence.
I doubt that there will ever be a standard accepted definition and as noted by Matthew in his post the AICPA definition is pretty vague. Dictionary.com also has a similar definition to Free Dictionary stating spousal equivalent requires cohabitation and a long-term sexual relationship. If I were a member of PCAOB and I had to define a spousal equivalent I would use similar key words including the cohabitation and relationship, but again, as noted by Matthew there is a need for set parameters regarding specific time frames. A specific defined length of time would be required for individuals to be considered spousal equivalents. Common law marriage came up during several searches regarding spousal equivalent and I would agree that it is probably the closest definition. It lays down specific rules regarding cohabitation and that the couple involved would have to be publicly open about their marriage, regarding spousal...
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