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State Board Report

August 2012

This past week I was privileged to attend a forum and reception in Washington, D.C., to recognize the 10th anniversary of the Sarbanes-Oxley Act. Retired Senator Paul Sarbanes (D-MD) and Retired Congressman Michael G. Oxley (R-OH) provided an account of the events and actions that led to the passage of the Act, and shared their thoughts as to the impact of the legislation during the first decade of its implementation. In response to a question from a forum participant, both Senator Sarbanes and Congressman Oxley opined that sections of the recently passed JOBS (Jumpstart Our Business Startups) Act significantly weakened their Act in the protection of investors. As I listened to their commentary, my first thought was, “NASBA had it right!”

As you may recall, at the 2012 NASBA Executive Directors’ Conference in San Antonio we informed the participants of the regulatory risks in the JOBS Act. In the following days, NASBA led a national effort that resulted in many of you (our State Boards) contacting legislators in writing and in person to oppose the problem language. We ultimately lost that battle because few legislators were willing to oppose a “jobs” bill in a bad economy and in an election year. Recently, as indicated by Senator Sarbanes and Congressman Oxley, and by high-level panelists at other forums, the problematic language in the JOBS Act is being re-evaluated. Before the Act’s passage, NASBA was one of the few national associations to step up and push back against a high profile piece of legislation: Turns out “NASBA had it right.”

I want to be careful not to appear to be gloating. I have spoken frequently about the critical importance of NASBA being a relevant player both nationally and internationally. The Boards of Accountancy need to have a collective and cohesive voice on matters such as the JOBS Act. In January, we implemented the “NASBA Position Process” for developing, vetting and approving responses and communications about issues, to ensure we are representing State Board interests. That new process is working well and NASBA’s standing will continue to ramp up as a result.

NASBA being right on the issues is not unprecedented. The recent SEC staff recommendation not to plunge into IFRS convergence in a wholesale fashion, but to take the time to carefully assess the need, cost and ramifications of convergence, is exactly the position taken by NASBA from the beginning of the consideration of the proposed transition. Arguments and positions raised by NASBA in our written responses were quoted in the SEC staff ‘s paper (see story on page 2 of this newsletter). The thought leaders of NASBA, representatives of our State Boards, were ahead of the curve and, once again, we can say “NASBA had it right.”

Many of us took great pride in the remarks of John J. Brennan and Teresa S. Polley (Chairman and President and CEO) of the Financial Accounting Foundation (FAF) at our Regional Meetings this year. To hear leaders such as Jack and Terri publicly comment on the FAF’s positive relationship with NASBA, and their appreciation of NASBA’s contributions to deliberative processes, only re-enforces the enhanced relevancy of NASBA and State Boards. Beginning with our participation in the Blue Ribbon panel discussions (wherein NASBA’s stand was labeled “the super minority position”), and our early public letter supporting the FAF’s process and ultimate decision to develop the Private Company Council (PCC) as a part of the FASB, versus creating a new board, “NASBA had it right.”

Okay, maybe I am gloating a bit…but this is not about me. This is about the power of an organization with volunteers who have the fortitude to aggressively and publicly debate issues, to disagree, to encourage opposing viewpoints and to make public protection based decisions that may go against the organized profession’s point of view. My list of examples could be much longer, including such current topics as funding for standard setters, independence of reporting accountants and State Board relevance, which in each case “NASBA had it right!”

Semper ad meliora. (Always toward better things.)

— Ken L. Bishop
President and CEO

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