State Board Report

November 2007

The need to internationalize credentials is growing, International Federation of Accountants (IFAC) Chief Executive Officer Ian Ball told the “Thinking Globally” panel at the Annual Meeting. “The pace of internationalization of the accounting profession is building all the time,” he observed.

IFAC, which has member bodies that represent 2.5 million accountants, now has very specific membership obligations, Dr. Ball noted. IFAC requires its member bodies to support international reporting standards. NASBA and the AICPA are member bodies.

Daniel L. Goelzer, member of the Public Company Accounting Oversight Board, reported the Board as of mid-October had registered 1,807 accounting firms, with only 985 being US-based. The PCAOB “must oversee firms that file with the SEC, without regard to the domicile of their auditors,” he said. The PCAOB is now doing a country-by-country review to determine how similar non-US oversight is to that in the US. This is being evaluated in five categories: adequacy and integrity of the firm review system; the independence of the system from the accounting profession; independence of the funding of the review; transparency of the system; and historical performance. To date, the PCAOB has established cooperative relationships with 20 countries, he reported.

As a setter of auditing standards, “the PCAOB does not have a roadmap for convergence like what we see on the accounting side of the house,” Mr. Goelzer stated. The PCAOB has observer status with the International Accounting and Auditing Standards Board and the IAASB has an adviser to the PCAOB. “It will be a challenge for us in the year ahead to see where it is right converge and where it makes sense to have differences.”

Moderator Samuel Cotterell, NASBA vice chair, asked, “What do you expect from state boards of accountancy interfacing with your organizations?” Mr. Goelzer responded, “We are on the verge of a revolution in education. Our teaching and examination does not include anything on international standards and that is the road that will have to be changed, and the state boards will have to take it.”

Asked to comment on what the US Congress is doing about international trade, US Congressman K. Michael Conaway, past NASBA chair, noted that President George W. Bush’s fast track authority for implementing trade agreements ended June 30, 2007 and extending it to increase foreign trade does not appear to be on the majority’s agenda now. “Congress is thinking locally,” he observed. He said he was not aware of any movement in Congress at this time to oversee the Securities and Exchange Commission.

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