The American Institute of CPAs has sent a letter to members of the House Financial Services Committee supporting a bill aimed at narrowing the definition of “municipal advisor,” without weakening investor protections.
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The Financial Services Committee is expected to mark up the bill, H.R. 2827, on Wednesday. The bill would require people who provide financial advice to municipal entities to register with the Securities and Exchange Commission, but the AICPA hopes to exempt CPAs from that requirement.
“Overall, we believe Section 975 of the Dodd-Frank Act is important for strengthening investor protections in the municipal securities market, but we believe that a narrower definition of a municipal advisor is also needed,” wrote AICPA president and CEO Barry Melancon. “This bill would do that without weakening the investor protections afforded by Dodd-Frank.”
Section 975 of the Dodd-Frank Act amended Section 15B of the Securities Exchange Act of 1934 to, among other things, make it unlawful for municipal advisors to provide certain advice to, or solicit, municipal entities or certain other persons without registering with the SEC. However, the AICPA does not believe accountants who are providing “customary and usual services” should be included in the definition.
In the letter the AICPA sent Monday, Melancon wrote, “We specifically support the definition of a municipal advisor that does not include an accountant who is ‘providing customary and usual services, including any attestation or audit service or issuing letters for underwriters for a municipal entity or providing advice that is related to or in connection with any such activities and not for separate compensation.’”
He noted that accountants providing “customary and usual services” are subject to the AICPA’s professional standards and to the regulatory authority of a state board of accountancy or a federal authority, such as the Internal Revenue Service. Thus, CPAs are subject to layers of regulation that already adequately protect investors. Additional regulation by the SEC is not necessary, Melancon contended.