We live in a world where change happens so fast it doesn’t give us time to adjust to the new “normal”. If there is one thing that we can expect from working in the accounting profession, and the regulation of accounting, it is that change will continue — and it will happen at a faster pace than in any other time in our history. As regulators, it is our ability to adapt to change that will mold the future of public protection. I believe now is the perfect time to examine each of the three Es (education, examination and experience), along with the fourth E, ethics, to better prepare us as regulators in this fast-paced changing world. I also believe it is the perfect time to look at the history of Peer Review to shape the program for the future.
As we all know, the first hurdle to becoming a CPA is education. Most jurisdictions require a minimum of 120 credit hours to sit and 150 hours for licensure. However, the additional 30 hours required have not been specified in most jurisdictions. Education, technology and professional standards have certainly changed dramatically over the past 10 years. Is it time to evaluate the need for additional specificity in some of the required hours and to consider alternative ways that candidates might meet the 150 hours through internships, life experience and additional testing.
The second of the three E’s is what every candidate loves, the Examination. We must ask how frequently the Exam needs to be updated. Continuous testing, refreshing the Exam questions and providing results in a timely manner are all testing issues being explored today.
The experience requirement is currently being discussed in many circles. Jurisdictions require a minimum of one or two years of experience to obtain a license. A 1999 change to the UAA added a requirement that the individual signing an audit on behalf of the firm had to meet the competency requirements set out in professional standards. In practice, as an audit partner in a small firm, I like to ask staff members when they complete an audit, but prior to its review, if they would like to sign the report. Even asking staff with more than three years of experience, I have yet to have one want to sign. They understand that they may not be competent to assume the responsibility of signing the audit report. So, we must ask ourselves, is it time to reexamine the experience requirement to determine if it is sufficient for protecting the public?
As regulators, we must remain engaged in the evolution of the profession – because the risk of doing nothing would be disastrous. We heard loud and clear that the proposed technology pathway was not acceptable to Boards. But we also received the message that we should continue to work toward effective solutions. The CPA Evolution Working Group will revisit the challenges technology has presented.
The last of the E’s is ethics. The Uniform Accountancy Act Committee recently met to discuss Non-Compliance with Laws and Regulations known as NOCLAR. This is a very sensitive issue and the UAA Committee will continue to work on this project and consult with the AICPA Professional Ethics Executive Committee to provide the best solution to protect the public, and also to not put CPAs or their firms in harm’s way.
Those of you who know me know that I am passionate about Peer Review. I have been involved since the mid 80’s. The AICPA Peer Review Program is utilized by jurisdictions that require Peer Review. This program was originally a voluntary process. Since 1992, the AICPA and State Boards through NASBA have supported mandatory Peer Review as a requirement of licensure. However, the AICPA is still required to maintain confidentiality of the reports based on its 1988 commitment to members, although State Boards have continued to ask for increased transparency. To assist Boards, the AICPA has provided an alternative to acquire information through its Facilitated State Board Access.
If a State has rules and regulations that provide for a Peer Review Oversight Committee, the PROC’s members must sign a confidentiality agreement. They are permitted to attend Report Acceptance Body meetings and receive all materials that a Report Acceptance Body member receives, and they are permitted to sit in on discussions of the reviews submitted for acceptance. They can participate in the oversight of the Peer Review Program’s Administering Entity and provide a report to their State Board. This process gives Boards direct oversight over the program.
Recently the AICPA Peer Review Board issued guidance regarding who could sit on a PROC. As PROCs are oversight bodies acting on behalf of Boards of Accountancy, their members should be selected by Accountancy Boards. NASBA’s leadership and members of the Compliance Assurance Committee (CAC) met with the Peer Review Board and it was agreed that AICPA and NASBA staff will be working together to determine the appropriate selection guidance, but Boards will have the ultimate decision on PROC members.
I also feel there is a D that needs to be discussed – diversity. We must continue to promote diversity of all minorities – including women, people of color and others — to become involved in the regulation of accounting. I believe, if diversity had not been an initiative for NASBA, I probably wouldn’t be your Chair today.
In conclusion, we need to reevaluate the three Es to ensure we are being responsive to all of the changes that are occurring and will continue to occur. We need to continue the work on NOCLAR and ensure that ethics rules are appropriate. Peer Review will always bring challenges and we will be prepared to meet those challenges through open communication and dialogue with all parties involved. I thank you for putting your trust in me and allowing me to partner with you as we move the regulation of the accounting profession into the future.
—Janice L. Gray , CPA
- MEMBER CENTER
- Board Member Portal
- Member Products & Services
- Meetings & Events
- Legislative Support
- Board Gateway Access
- PROC Resources
- Enforcement Tools
- NASBA Awards
- ED Login