NASBA BOD Opposes Staff Augmentation

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The NASBA Board of Directors at their January 17 meeting reaffirmed their opposition to allowing a CPA firm’s staff to provide non-attest services to an attest client while under the client’s supervision as it compromises the firm’s independence. This practice, termed “staff augmentation” in an interpretation of ET 1.200.001 under consideration by the AICPA’s Professional Ethics Executive Committee, was opposed in NASBA’s February 25, 2019 letter to PEEC, but has continued to be discussed by PEEC at its recent meetings. The NASBA Board wrote to PEEC that it urges licensees who may be engaged in such practice to immediately stop and encourages the State Boards of Accountancy to enforce their current independence rules.

A major portion of the Board’s January meeting was devoted to updates on the progress of the CPA Evolution initiative (see stories on page 2). NASBA Chair Laurie J. Tish outlined how the project is being advanced and topics that need to be addressed at the AICPA/NASBA leadership summit on February 7. A tentative timeline for the project was presented that would call for an exposure draft to be released prior to NASBA’s June Regional Meetings.

Also discussed by the NASBA Board in January were the ongoing and anticipated projects of the AICPA/NASBA Uniform Accountancy Act Committee. UAA Committee Chair Coalter Baker (TX) reported the Committee is expected to focus in the weeks ahead on changes to the Act and the Model Rules that may be required to support the CPA Evolution initiative. Still under consideration are proposals related to NOCLAR (noncompliance with laws and regulations by clients) and adding experience for audit practices.

UAA Committee Task Force Chair Stephanie Saunders (VA) reported requiring a set number of hours of recent audit experience for those CPAs signing audit reports is being given additional study. Among the issues still to be resolved are how to measure such experience, verify such experience and offer alternatives when the practice environment cannot provide the required number of audit hours.

Since the International Ethics Standards Board for Accountants revised its Code of Ethics in 2016 to address NOCLAR, how US standards could conform to the international standards has been under debate. Mr. Baker reported to the NASBA Board in January that the UAA Committee’s legal counsel is continuing to develop proposed changes to the UAA that would clear the way for NOCLAR measures to work with state law. These would be aligned with changes under consideration by the Auditing Standards Board. Over the last few months, the ASB has been addressing possible revisions to AU-C Section 210, Terms of Engagement, that would require communication to the successor auditor if the predecessor auditor withdraws from an engagement because of identified or suspected NOCLAR. No new exposure drafts on this issue have been released yet.