State Board Report
The importance of vetting, objective experts and responsiveness to the needs of financial information users was stressed by the participants in a panel on standard setting that brought together Public Company Council Chairman Billy Atkinson, American Institute of Certified Public Accountants Vice President Charles E. Landes and International Federation of Accountants Executive Director James M. Sylph. Moderated by NASBA Director-at-Large Laurie J. Tish (WA), the panelists agreed to disagree on several major points at the Annual Meeting.
“Any State Board going through sunset review might want to look at what the basis of accounting should be,” Mr. Atkinson, a NASBA Past Chair and Past Chair of the Texas State Board of Accountancy, advised the NASBA Annual Meeting. “My concern is about auditors. The CPA has been given the responsibility to be the authority on the attest function. To the extent that we let others in [to that area], the public is losing confidence. We have to be mindful of that responsibility and take the higher road.”
Standard setting falls into two big buckets, according to Mr. Landes: one is for verification where the CPAs have the monopoly, and the other is the “preparers’ bucket.” He said, “I believe we need to keep the two buckets separate.” There has not been as much convergence among standards in the preparation bucket as there has been in the verification bucket, he observed. He pointed out: “There are literally thousands of contracts that prescribe certain presentation of accounting information. If you are a State Board and beginning to think about special purpose frameworks, know they are not new and there is a heck of a lot bigger universe than you might think.”
Moderator Laurie Tish told the panelists: “There is a proliferation of bodies claiming standard setting. What is the future of these standard setters?” Mr. Sylph replied, “There are others trying to set accounting functions and trying to create their niche, but I think that will be short term. I think integrated reporting will happen. The reporting in the future will be a single report that will combine all this information and the auditor will be challenged to do this. We will be looking at different models.”
If the Public Company Accounting Oversight Board’s proposed auditor’s report is approved, that will result in a long form auditor’s report that is more than three paragraphs, Mr. Sylph noted. “The challenge for everyone in the accounting industry will be how will those reports be received. I think we have a challenge when two banks report two different key things. How will that be received by the general public?” He predicted there will be increased complaints against audit firms because they didn’t look at the same key things. “State regulators will have to wrestle with more than on/off determinations and there will be more complaints from a broader group of stakeholders,” he said.
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