TIME TO LICENSE TAX PREPARERS
I read with great interest the article about the IRS's inability to track tax preparers (on WebCPA.com, and as "Big Brother may not be watching," Aug. 17-31, 2009, page 1). There have been several recent articles about the lax enforcement of tax preparers. As a CPA, I am constantly aware of the failure of many of these supposed professionals whose work product is sub-standard. Many do not maintain copies of client backup information, workpapers, etc.
Due to the large volume of individuals who can prepare tax returns without a license, let alone do not have the proper education, my recommendation is that the state accountancy boards require all individuals to be licensed and subject to the standards established by the state laws.
Only CPAs and PAs (a dying class) are subject to reporting to the Accountancy Board of Ohio. When there has been an impropriety by non-CPAs, the board rejects claims made by innocent victims, stating that the non-licensed individuals are not CPAs, and therefore do not fall under its purview.
Edward Hattenbach
Cincinnati
INFLUENCE ON STANDARD-SETTERS
Your cover story on regulatory reform (July 20-Aug. 16, 2009) reports on the administration's recommendation that standard-setters such as the Financial Accounting Standards Board agree on a single set of global accounting standards, and concludes with the observation that earlier recognition of loan losses by banks might have averted the credit crisis. The implication is that standard-setters have the public's interest at heart, when history shows that standard-setters, much like politicians, are subject to influence from special interest groups.
Less than a decade ago, our professional standards were revised with the issuance of FIN 46 in response to the abuse of variable-interest entities perpetrated by Enron, and yet FASB granted an exemption from FIN 46 to the banking industry, allowing the banks to engage in the behaviors that led to the credit crisis. It's true that FASB was only a supporting player in the credit crisis. The bank regulators were the true enablers, but after the banks convinced the regulators that credit derivatives removed credit risk from the balance sheet, FASB followed along.
At times like these, FASB appears to be so swayed by political pressure as to be utterly ineffective.
We again see FASB bowing to political pressure with the recent issuance of FSP FAS 157-4. We now see the financial services industry abusing mark to market while our standard-setters refuse to acknowledge the risk in their rush to fair value accounting. FASB 157 establishes an approach to determining the fair value of an asset when market prices are not readily available using "unobservable inputs." This is also known as the "mark-to-make-believe" asset category. With FSP FAS 157-4, FASB has blessed the banking industry's practice of hiding impaired assets in the "mark-to-make-believe" category. What the credit crisis has made clear is that fair market value is whatever the most powerful interest group says it is.
Harry Bose, CPA
Read & Bose PC
Pendleton, Ore.
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