California officials are starting to consider making changes to accounting reforms the state adopted in the wake of Enron Corp.'s collapse.
The state's Board of Accountancy, which licenses CPAs and accounting firms, is considering making changes to the audit documentation process, according to an article in the Los Angeles Times. The newspaper said that the board is pushing a bill in the state legislature that could open the door for out-of-state accountants to offer tax shelters and practice in California without the oversight now required.
Of concern to some, Gov. Arnold Schwarzenegger had to recently ask a new appointee to the 15-member board to step down after barely a month. Attorney Marcus McDaniel, who is with the firm Latham & Watkins, replaced Gail Hillebrand, a vocal advocate for consumer rights, in a slot meant for people who are not accountants. McDaniel stepped down when advocacy groups questioned his firm's business ties to the Big Four accounting firms. Schwarzenegger has yet to indicate who he will appoint next.
Board of Accountancy president Ronald Blanc told the newspaper that he believes the board is still very conscious of providing protection to consumers.
Among specific changes the board is considering:
- The scrapping of a requirement for firms to carefully document any material removed from an audit. Firms were required to reveal who removed the material, what was removed and why it was done.
- The elimination of a provision requiring out-of-state accountants to get a temporary permit to practice in California. In February, the board endorsed a proposal to excuse accountants who practice by phone, fax or Internet, but who don't physically enter the state. The California Society of CPAs has backed that bill.
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