Bookmark and Share

State Board Report

July 2013

I hope all of you had a wonderful Independence Day and weekend. I spent much of my holiday weekend in communications with senior staff and volunteer leadership of NASBA, AICPA and other accountancy-related organizations discussing an important issue.

For those who attended the NASBA Regional Meetings in New Orleans and Chicago, you know that a primary focus was on the AICPA’s recently released Financial Reporting Framework for Small and Medium-Size Entities (FRF-SME) and differences of opinion and levels of acceptance by AICPA, NASBA, and other entities. Before you start rolling your eyes, let me assure you that this Memo is not intended to be persuasive toward any aspect of that issue. In fact, I believe it is time that we all take a breath.

In past articles and talks, you have seen me articulate my belief that passionate and robust discussions over disagreements are a healthy exercise in getting to good outcomes. To outside observers, the rhetoric, divisiveness and volume of the discussion may appear to be adversarial or mean spirited. That inference is not accurate, but it prescribes that we step back a bit, look at our overall activities, consider our mission and “take a breath.”

NASBA and AICPA each have unique and disparate priorities and missions. NASBA’s focus is on protecting the public interest through its advocacy and support of State Boards of Accountancy. AICPA has a responsibility to promote the CPA credential and profession. However, each organization benefits from the focus of the other. It has always been my position that a strong and viable CPA profession is a key element of public protection and I know that AICPA supports protecting the public interest and a strong state-based regulatory system that insures the integrity of the profession. Public is the CPA’s middle name and there is no profession if that is ignored.

Let’s step back and look at all the projects that NASBA, the State Boards and the AICPA are working on successfully together. We’ve got a quality Uniform CPA Examination that we are now offering internationally, developed by a joint Board of Examiners. Six mutual recognition agreements with professional bodies in other countries have been developed by the NASBA/AICPA International Qualifications Appraisal Board. You will shortly be receiving an exposure draft on the redefinition of “attest,” proposed to be included in the Uniform Accountancy Act, which is jointly created by NASBA and the AICPA. With NASBA’s encouragement, many State Boards have created Peer Review Oversight Committees of compliance assurance programs administered by the AICPA. We have jointly created standards for Continuing Professional Education program sponsors. These are just some of the activities we are pursuing that betoken a good working relationship with the profession. Are the State Boards controlled by the professional association? They are not. However, NASBA and the Boards do recognize the expertise, resources and legislative support the profession contributes to effective regulation.

As I stated last month, AICPA and NASBA started the private company financial reporting journey together by agreeing that new standards were needed for small and medium-sized private entities. We have never deviated from that important agreement, and it still stands. It is natural that we might initially disagree on how we get to where we need to be. That’s frequently what is needed to arrive at a good solution. As stated above, our missions and focus are different, but not without nexus.

Recently, the newly developed Private Company Council (PCC) released three proposals that were accepted by the Financial Accounting Standards Board (FASB) and released for public exposure. The proposals include the modification of the requirements for private companies to: separately recognize fewer intangible assets acquired in a business combination; permit amortization of goodwill; and have the option to use simpler approaches to accounting for some types of interest rate swaps. Both AICPA and NASBA have publicly congratulated the PCC and FASB for their work. The speed with which the PCC and FASB released these proposals was a positive sign of their providing credible relief for private companies.

On occasion, I hear from stakeholders who are concerned about the disagreements NASBA may have with the AICPA. I acknowledge and appreciate that concern. While I would again argue that the disagreements may be natural and healthy, the comments clearly imply the expectation that we address these issues respectfully. I wholeheartedly concur with that premise. It might surprise some of you to know of the great working relationship that I, our staff and our volunteer leadership have with our counterparts at the AICPA. When we are not exchanging ideas related to regulation, you might find us trading tips on selecting wine, good vacation spots or college teams. You have often heard me talk about the importance of State Boards and State Societies having an open and trusting relationship. The same applies to NASBA and AICPA.

I believe that the conversations, debates and even arguments about the changes that are occurring in the accounting world are important to getting to a good end. We should never forget the myriad of mutual challenges that we have faced together. It is too early to forecast the outcome of the FRF-SME debate, but we can turn down the volume a bit. In other words, “Let’s all take a breath!”

Semper ad meliora. (Always toward better things.)

— Ken L. Bishop
President and CEO

Related News

Full Issue