State Board Report

November 2011

At the NASBA Board of Directors’ meeting, on October 21 in Nashville, the following resolution was passed by an overwhelming majority vote: “Authorized the President and Chair to communicate to the Financial Accounting Foundation (FAF) the following:

  1. The Board of Directors agrees with and commends the FAF process;
  2. Acknowledges the sovereignty of State Boards’ independent actions and authority to fulfill their responsibilities pursuant to Sarbanes-Oxley Section 209, pertinent state laws and the 10th Amendment to the U.S. Constitution;
  3. Supports the conclusions of the FAF as exposed in its “Plan to Establish the Private Company Standards Improvement Council”; and
  4. Supports and intends to monitor the accountability measures contained therein to ensure the Improvement Council will accomplish its objectives.”

 

The vote came after extensive discussion of what the member Boards expected from NASBA. As a co-sponsor of the Blue Ribbon Panel (BRP), which had sent a recommendation to the Financial Accounting Foundation that a second standard-setting board should be created for private companies, the NASBA Board decided it had to speak up. NASBA had supported a “minority position,” which was similar to the FAF’s final decision, to move to a Private Company Standards Improvement Council (see sbr 10/11) that would be a subcommittee of the FASB.

“We have 55 Boards and every time we speak we have to realize the Boards have the authority. There is a balance of those Boards looking for guidance and those asking, ‘Where does the NASBA Board get the authority to take a position?’ Boards can still write their own letters to the FAF,” Past Chair Billy Atkinson told the Board. Several of the NASBA Board members said their State Boards were waiting to hear what the NASBA Board would conclude about the FAF’s proposal. Comments on the proposal can be submitted to the FAF Board of Trustees until January 14, 2012 via PrivateCompanyPlan@f-a-f.org.

At the October Board of Directors’ Meeting, President David Costello praised the independent attitude of the Board and the previous Boards who had worked with him over his 17 years with NASBA. He observed they could not be intimidated by anyone or forced into an opinion. “You come from different backgrounds – and that is a strong thing,” President Costello stated. As this was the last Board meeting Mr. Costello would attend prior to his January 1 retirement, the Board members offered their observations of him as well, describing him as: a caring visionary, energized, tenacious, a good listener, farsighted, a ringmaster extraordinaire and a compassionate leader.

Executive Vice President Ken L. Bishop reported NASBA is creating new ways of generating revenue to assist the State Boards. He announced that Denise Hanley had been named NASBA’s Chief Data Officer and will be building on NASBA’s bench of capabilities. For example, NASBA will be able to do custom reporting for schools based on the results of candidate performance statistics. The Candidate Performance Handbook’s on-line version went operational on October 20, Mr. Bishop said.

Treasurer Theodore W. Long, Jr. (OH), chairman of the Administration and Finance Committee, reported NASBA had the best financial year in its history in 2011, with consolidated earnings of $9.5 million. In addition, unrestricted net assets at year-end were $26.9 million and NASBA continued to be free of debt. Mr. Long also reported that NASBA achieved a 12.2 percent return on its long-term investments for the year.

Ethics Committee Chair Gaylen Hansen (CO), who represents NASBA on the AICPA’s Professional Ethics Executive Committee, said he is preparing a letter with Raymond Johnson (OR), who also represents NASBA on PEEC, pointing out where a proposed AICPA rule on the return of client records is less stringent than a rule currently in place in 38 states. “Return of client records is the number one source of complaints to the State Boards,” Mr. Hansen pointed out.

Comments on the proposed revisions to the “Statement on Standards for Continuing Professional Education Programs,” will be accepted until December 1, 2011, Telford A. Lodden (IA), chair of the CPE Advisory Committee, told the Board. Approximately 40 pages of comments had been received and reviewed by the Committee, resulting in some minor modifications to the exposure draft, he said.

NASBA’s investigator program is ramping up, Enforcement Committee Chair Harry Parsons (NV) reported. Smaller states in particular want help with investigations, and the Committee is trying to have the appropriate experts available in different regions, he said.

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