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State Board Report

July 2013

Comments from State Board representatives were welcomed by Michael L. Brand, Chair of the AICPA’s Accounting and Review Services Committee, and Chas J. McElroy, Chair of ARSC’s Task Force, at breakout sessions moderated by NASBA’s Compliance Assurance Committee Chair Janice L. Gray (OK) at the Eastern and Western Regional Meetings.

“The compilation standard is not ready to be released in 2013: It will change,” Mr. Brand told the NASBA audience. He stated, “PEEC [AICPA's Professional Ethics Executive Committee] has clarified the preparation of financial statements is a non-attest service,” when it amended 101-3. ARSC then had to create a non-attest compilation/preparation standard that puts requirements around what a CPA needs to do when preparing financial statements. Mr. Brand asked those in the audience to indicate if they felt that independence is important for the preparation of financial statements. About half of the audience did so.

“We are not trying to converge with international standards: They are way behind us on compilations and reviews,” Mr. McElroy told the NASBA audience. However, ARSC is determined to converge review standards with AU-C section 930, Interim Financial Information. “We are taking the position that independence is not required for compilations. We are saying that the accountant has the option of disclosing independence–or lack thereof,” Mr. McElroy said and added that the ARSC is very interested in getting the Boards’ feedback on giving the accountant the option of disclosing independence.

“My question is where attest really begins,” NASBA Past Chair Billy Atkinson (TX) said. “I say it begins when you associate the licensed CPA with the service. You are beginning to bifurcate the independence standards, and I have a concern about that.” Mr. McElroy responded: “On bifurcating the independence standards, our preference would be to not have anything in there…ARSC looked at the survey that the public wants to know if we had a financial interest, so we put that in the draft. If that is confusing, we would want to hear from NASBA about that.”

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