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State Board Report

July 2013

The definition of “attest” is what only a licensed CPA practicing in a licensed CPA firm can do, explained AICPA Vice President Sue Coffey, at the NASBA Regional Meetings. “The definition of attest is used in multiple places in the Uniform Accountancy Act, so it is critical to get this definition right,” she said. Joining her to explain why a change in the “attest” definition is being proposed at this time, NASBA UAA Committee Chair Ken Odom (AL), pointed out that non- CPAs are performing services that should be considered attest services and are using reporting formats that have been developed by the AICPA. “Our role is to protect the public,” Mr. Odom said. “When the public receives a report that looks exactly like a CPA’s, it is confusing to them. There is an element of trust that comes with using a CPA. The public thinks they are getting something they are not.”

While just five years ago, assurance and attestation services were generally limited to audits and reviews of historical financial statements, the needs of clients are changing, Ms. Coffey observed. “In recent years, CPAs have increasingly been asked to provide assurance reports on representations other than historical financial statements. And, more importantly, non-CPAs have been asked too – and have been using the AICPA’s standards of practice!” Among the many examples of such attestation engagements that she listed, where a CPA would apply Statements on Standards for Attestation Engagements (SSAE), were: examining or reviewing sustainability reports, examining or reviewing XBRL data, examining the effectiveness of internal control over financial reporting, and examining or reviewing Greenhouse Gas Emission statements.

An exposure draft of language proposed by the joint NASBA/AICPA UAA Committee will be coming out in July with a comment deadline in October. Both the NASBA Board of Directors and the AICPA Board of Directors held special conference calls to approve the language for exposure. The joint UAA Committee is also considering how firm mobility could be provided for in the UAA in a manner that would bring more uniformity among those states that already do not require CPA firms from outside their state to register if they do not have an office in their state, and that would be workable for other states as well. While the AICPA and NASBA leadership have agreed that it is important for all states to embrace a uniform definition of “attest,” they have recognized that some states may not be ready to consider adopting firm mobility at this time.

“Firm mobility is already in operation in some states, including Alabama, my state,” Mr. Odom said. “We don’t want to ask State Boards to keep going back to the legislature to make changes in their statute, so it is extremely important that whatever language is proposed for the attest definition dovetails with the firm mobility language. During the exposure period we hope to be getting comments back that will enable us to craft something for the final language. Our goal is to have the attest model language ready for introduction for the 2014 legislative sessions. Firm mobility may take longer.”

Besides the definition of attest and provisions for firm mobility, the UAA Committee still has several other topics under discussion, Mr. Odom reported. These include: (1) the scope of services that can be offered by an “inactive CPA”; (2) under what circumstances client records must be returned; and (3) when a CPA can whistleblow and not be in violation of professional standards.

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