The American Institute of CPAs voted to allow changes in the definition of “attest” during its Spring Meeting of Council on Sunday in an effort to fend off competition from non-CPA firms and unlicensed CPAs who offer attest services using AICPA standards.
The AICPA Council voted to adopt a resolution that will authorize the AICPA board of directors to approve amendments to the definition of attest as a way to protect the public from firms and individuals that claim to offer attest services, such as reports on sustainability and service organization controls, without being licensed as CPAs.
“In this environment, it’s not just CPA firms that are performing those services using our standards,” said AICPA vice chairman William Balhoff. “The AICPA standards today are being used by non-licensed CPAs and non-licensed firms.”
Today, the definition of attest services under the Uniform Accountancy Act includes audit engagements under SAS (Statements on Auditing Standards), reviews of financial statements under SSARS (Statements on Standards for Accounting and Review Services), audits under Public Company Accounting Oversight Board standards, and also examinations of prospective financial information under SSAE (Statements on Standards for Attestation Engagements), he noted. There would be no changes in the first three categories, Balhoff noted, and those would still be attest services.
The change would come with SSAE standards. “Whereas in the past, examinations of prospective financials were included in attest engagements, now it’s being proposed that examinations, reviews and agreed upon procedures would also be included,” said Balhoff.
He added that in many states, such as Louisiana, compilations are included as an attest engagement under the law, and the AICPA is not asking to change the state laws. However, the AICPA wants to modify the UAA nationally because it believes the public is confused when they hear that non-licensed individuals and non-licensed firms are performing attest engagements under AICPA standards.
“When they refer to our standards, there’s an inference that they go through the same rigors that we go through as professionals,” said Balhoff. “We get tested, we have the education, we have the lifelong learning, we have the regulations. As firms we have to have all the control systems. We’re peer reviewed. All of these things are very important, and the marketplace is having trouble distinguishing between the people who are using AICPA standards and the firms who have gone through all those rigors and those who have not.”
Another resolution passed by the AICPA Council was to continue to recognize the International Accounting Standards Board as an accounting standard-setter for international financial accounting and reporting principles subject to re-assessment, no sooner than in three years but no later than in five years. The AICPA Council had voted in May 2008 to designate the IASB as a body to establish professional standards with respect to international financial accounting and reporting principles. However, the Council also resolved at that time that it would re-assess in three to five years whether continued recognition of the IASB was appropriate. With the end of the five-year reassessment period approaching this month, the AICPA staff wanted Council members to decide whether they should continue to designate the IASB as a body to establish accounting principles (see AICPA to Reconsider IASB Recognition, Definition of Attest, and Global Credentials).
The conference was opened by AICPA chairman Richard Caturano, who discussed the AICPA’s efforts to increase diversity in the accounting profession with its National Commission on Diversity and Inclusion. The effort has extended to the AICPA board as well. “Next year for the first time in the 125-year history of the AICPA, more than 50 percent of our board of directors will be comprised of women and minorities,” he announced.
The AICPA added former Congresswoman and former Consumer Product Safety Commission commissioner Ann Northup of Kentucky to the AICPA Board at Sunday’s Council meeting. Stephanie Bergeron, president and CEO of Walsh College in Troy, Mich., was also added to the AICPA Council.
Ron Brownstein, editorial director and columnist at National Journal and a senior political and election analyst at CNN, spoke about the increasing diversity of the American electorate during a speech before the Council members and how it is influencing presidential and congressional elections. “We have moved from an era of Republican dominance to an era where Democrats dominate in the presidential election,” he said. Brownstein also discussed the prospects for tax reform and the IRS scandal.
“The IRS story could look very different if there is any evidence that political appointees influenced this decision,” he pointed out.
In discussing tax reform, Brownstein believes President Obama made a big tactical mistake when the Bush tax cuts expired at the end of last year not to push harder for all of his tax reform priorities. Now he needs to go back to Republicans in Congress to raise taxes a second time, which is going to be much harder to accomplish. He acknowledged that House Ways and Means Committee chairman Dave Camp, R-Mich., and Senate Finance Committee chairman Max Baucus, D-Mont., have set up a bipartisan tax reform Web site, TaxReform.gov, where they are soliciting ideas for tax reform. But he believes the prospects for tax reform will depend on whether there is a budget deal between the Democrats and Republicans Congress and the Obama administration.
“Tax reform is hostage to a larger impasse over the budget, which is hostage to two vast diametrically opposed coalitions,” he said. “We have two coalitions that are almost equal in size that have different institutional bases of strength in the executive branch, the House and Senate, and they are finding it more and more difficult to bridge their differences.”
Sunday’s AICPA Council session also included a panel discussion of the Chartered Global Management Accountant designation that the AICPA launched in January 2012 as a joint venture with the London-based Chartered Institute of Management Accountants. AICPA senior vice president of management accounting and global markets Arleen Thomas announced that approximately 39,000 individuals in the United States now hold the CGMA designation, along with 90,000 CGMA holders around the world. Most of them have been grandfathered into the program by having prior management accounting experience or prior credentials from the AICPA and CIMA, but Thomas said that they were preparing CGMA holders in the U.S. for assessment examinations that will occur in January 2015.
For more from Spring Council, see: