The American Institute of CPAs testified before Congress in favor of exempting CPAs from oversight by the proposed Consumer Financial Protection Agency, arguing that CPAs are already highly regulated.
At a recent hearing before the House Committee on Small Business, new AICPA chairman Bob Harris said that small businesses such as his CPA firm would be harmed if they were subject to regulation by the agency. The Obama administration has proposed the creation of the new agency to help protect consumers from abusive mortgages and credit card terms, and other deceptive financial practices.
"We believe it is critical to consider the plan's effect on small business to ensure that it does not stifle the innovation, creativity and inventiveness of the American entrepreneur that has driven our economic engine," said Harris, who is managing partner of Harris, Cotherman, Jones, Price & Associates, an 11-CPA firm in Vero Beach, Fla.
Harris noted that the CPA profession is already heavily regulated, and argued that the proposed legislation creating the agency, the Consumer Financial Protection Act, was overly broad.
"The definition of 'financial activity' in the bill is so broad as to include many services that CPAs routinely provide to their clients in accordance with a very strict regulatory and oversight regime," he said. "The bill would result in redundant regulation of CPAs and CPA firms that are already subject to appropriate and significant oversight by the IRS, Treasury, state boards of accountancy, and professional and ethical standards for the AICPA's members. CPAs should not be exempt from CFPA regulation when acting outside of the provision of customary and usual services to their clients, and we support additional oversight of financial products, such as refund anticipation loans."
Testifying at a separate congressional hearing, however, Treasury Secretary Timothy Geithner defended the need to create the new agency. "Without rules, the firm that makes its product appear more attractive by hiding the real cost to the consumer wins. Perhaps a firm does not want to take that route, but competition forces it to."
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