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State Board Report

October 2013

Soon we’ll come together again at our Annual Meeting to break bread, renew relationships and recharge our batteries for a new NASBA year. As Chair, I’ll report on my stewardship, to include some of what is below.

In 2002, when I joined the Colorado State Board of Accountancy and began attending NASBA meetings, the profession was reeling from Enron and WorldCom and grappling with a new kind of regulator, the Public Company Accounting Oversight Board. Meanwhile, NASBA and State Boards seemed focused primarily on licensing, the CPA exam and something called “mobility.” But for the most part, State Boards appeared quite comfortable looking elsewhere for guidance on practice standards. To put it politely, we were expected to make sure licenses were properly processed, complaints handled, fees collected and all things put in good order. But as a newbie, my impression was that NASBA and State Boards tended to rubber-stamp practice standards as they rolled out. My how things have changed!

NASBA has clearly entered a new era of relevance. The Association’s sphere of influence is no longer limited to more routine matters. This past year we have seen high profile appointments of past NASBA leaders. We continue to have many appointees serving on other critical boards and committees, both internal and external. They are shaping expectations about education, examination, attest and non-attest standards and, importantly, ethics. These good people serve quietly and often without much fanfare, if any. I am so appreciative of their service.

During my induction, I was asked frequently about my vision for the year. I lost a lot of sleep over that question. Centuries ago Paul famously said, “For now we see through a glass, darkly.” That’s how I felt, but like Johnny Nash sang in 1972, “I can see clearly now.”

Without a doubt, at the top of my “seeing clearly” list is the matter of private financial reporting. Without rehashing the play-by-play of where NASBA ended up on this matter, an important challenge was to come to grips with our unique calling as regulators. While many of us serve clients or employers in our “day jobs,” we obviously wear a different hat in our regulatory roles. As regulators, we had to find a rational, measured way to deal with non-authoritative practice that is acceptable. NASBA did so in a spectacular way. Without endorsing non authoritative practice, public protection concerns were identified and resolved to our satisfaction. Importantly, this was done thoughtfully and respectfully, in an assertive approach of which I am particularly proud.

Last year, NASBA committed to closely monitor the activities of the newly formed Private Company Council (PCC), and we have had representatives at every one of its meetings. At the “Ivory Tower” called the Financial Accounting Standards Board (FASB) in Norwalk, a new culture is emerging as private company reporting receives the attention it deserves. This is fulfilling the vision for which many of us longed. I have attended several PCC meetings and can report that excellent progress is being made. In retrospect, NASBA’s decision to support the FASB as the sole standard-setting body authorized to promulgate Generally Accepted Accounting Principles was the right choice. In fact, that decision was rock solid.

The private accounting debate brought us face-to-face with the notion of “authority” for all standards. What is authoritative and who gets to decide, and what about enforceability? We haven’t figured all of this out yet – and a standard-setting task force was appointed that will continue to study these difficult questions. Part of their charge is to question our current standard-setting role versus what it should be. This is a complex issue that will require our best thinking to make sure we stay on solid ground.

There were many other important issues we dealt with this year. A broadened “attest” definition was forged, uniform language for firm mobility is being developed and a revision of compilation service standards is underway that will retain important public protection concepts, such as transparent reporting and independence.

It has been my great privilege and honor to serve as your chair. I worked closely with our President and CEO Ken Bishop, and Executive Vice President and COO Colleen Conrad. After seeing them in action in their first full year, I can absolutely say the right leaders were selected to drive NASBA to the “next level” of relevance, a theme of our Annual Meeting. Collectively, and standing on the shoulders of those great leaders preceding us, we were vigilant. We did our very best to protect the public interest. My heartfelt thanks go to them, the rest of the staff, and all you volunteers for your support and willingness to serve faithfully at my side.

Rubberstampum finem seculi!

— Gaylen R. Hansen, CPA
Chair

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