In a little-noticed provision of the mammoth financial reform legislation approved Wednesday by the House, CPAs are authorized to help the GAOs Comptroller General conduct an annual audit of the Federal Reserves new Bureau of Consumer Financial Protection.
The Comptroller General shall annually audit the financial transactions of the Bureau in accordance with the United States generally accepted government auditing standards, as may be prescribed by the Comptroller General of the United States, said the bill, now known as the Dodd-Frank Wall Street Reform and Consumer Protection Act. The audit shall be conducted at the place or places where accounts of the Bureau are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, records (including electronic records), reports, files, and all other papers, automated data, things, or property belonging to or under the control of or used or employed by the Bureau pertaining to its financial transactions and necessary to facilitate the audit, and such representatives shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians.
The bill later goes on to describe the staff that the Comptroller General can engage to help conduct the audit. For the purpose of conducting an audit under this subsection, the Comptroller General may, in the discretion of the Comptroller General, employ by contract, without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the Director of the Bureau shall transfer to the Government Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses of the Government Accountability Office, and such amount shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report.
The provision may please some CPA firms looking for extra government work, if not Rep. Ron Paul, R-Texas, who has called for auditing the entire Federal Reserve. His Audit the Fed bill failed to pass in the House this week.
The Dodd-Frank financial reform bill does include a provision for doing some other Fed audits, though. The GAO is authorized under the bill to conduct a one-time audit of all Federal Reserve emergency lending that took place during the financial crisis. In the future the GAO would have on-going authority to audit emergency lending , discount window lending and open market transactions.
Perhaps paradoxically, another more widely noted section of the financial reform bill specifically exempts CPAs from regulation by the same bureau they might help audit. In a section entitled, Exclusion for Accountants and Tax Preparers, the bill notes, Except as permitted in paragraph (2), the Bureau may not exercise any rule-making, supervisory, enforcement, or other authority over (A) any person that is a certified public accountant, permitted to practice as a certified public accounting firm, or certified or licensed for such purpose by a State, or any individual who is employed by or holds an ownership interest with respect to a person described in ... subparagraph, when such person is performing or offering to perform (i) customary and usual accounting activities, including the provision of accounting, tax, advisory, or other services that are subject to the regulatory authority of a State board of accountancy or a Federal authority; or (ii) other services that are incidental to such customary and usual accounting activities, to the extent that such incidental services are not offered or provided (I) by the person separate and apart from such customary and usual accounting activities; or (II) to consumers who are not receiving such customary and usual accounting activities; or (B) any person, other than a person described in subparagraph (A) that performs income tax preparation activities for consumers.
That provision was lobbied for by the American Institute of CPAs, which has also backed a separate bill that would require the Comptroller General to be a CPA (see Bill Would Require Comptroller General to be a CPA). The current acting Comptroller General, Gene Dodaro, is not.