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State Board Report

July 2014

Firm mobility does not relieve a firm of having to comply with the laws of the state in which they are practicing, NASBA Uniform Accountancy Act Chair Kenneth R. Odom (AL) told the Regional Meetings. He reported the NASBA/AICPA UAA Committee had struggled with coming up with the new provisions in the Seventh Edition of the UAA, released in May, that provide for firm mobility, but, “In the end, we think we came up with a good document that will work with those states which already have firm mobility, will help firms who are practicing in multiple states and will give more teeth to states to regulate.”

The Seventh Edition contains four major changes to the UAA: (1) The revised definition of “attest,” which Mr. Odom called “the backbone of the UAA”; (2) Provisions for firm mobility; (3) Requiring non-CPA owners of firms to be “of good moral character”; and (4) Deleting the definition of “home office.” NASBA released these changes in two exposure drafts over the last year. All the changes, including firm mobility, are now in the Seventh Edition. Mr. Odom told the Boards at the Regional Meetings, “If you do not want to adopt mobility, NASBA will provide the approved exposure draft language that only covers the new definition of attest.” He noted that there are 17 states where firm mobility already exists because of early adoption or out-of-state firms are not required to be licensed.

Some states had expressed concern about how they could protect their citizens if they adopt firm mobility, NASBA legal counsel Noel Allen told the Meetings. “The old approach was just that – the firm had to register and if they failed to do so the prosecution had to be through injunctive relief. The ‘home office’ definition was not consistently adopted by states and there was difficulty in enforcing it,” Mr. Allen said. “The new approach lets the Board protect its own state as it can impose discipline on that firm (through civil penalties, sanctions or revocation of practice privileges, which is as serious as revocation of the license itself ) and it obligates the other states to bring enforcement against those who have done harm in your state.”

The NASBA/AICPA UAA Committee has a task force currently working on what services an “inactive CPA” can perform, Mr. Odom reported. Other issues up for consideration are the return of client records, CPA whistleblowers, updating the Model Rules and proper handling of a deceased CPA’s client records.

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