Two of the top legislative issues of importance to the accounting profession that state legislatures considered during their legislative sessions this year were bills to protect the public interest by revising the definition of attest and legislative initiatives designed to curtail spurious litigation by “patent assertion entities” (PAEs), commonly referred to as “patent trolls.”
Profession leaders revised the model attest language earlier this spring in a revised Uniform Accountancy Act (UAA), to close an important public protection loophole; non-CPAs were performing certain attest engagements, using AICPA standards, when they may not have the expertise, competency, and oversight to do so. The new comprehensive definition of attest also modernizes the model state accountancy act to reflect the evolving ways in which CPAs are providing attest services to their clients.
Several states have already begun updating their statutes to align with the UAA definition. In total, 22 jurisdictions now have a comprehensive definition of attest and six (Alabama, Arizona, Georgia, Indiana, the U.S. Virgin Islands, and Wisconsin) passed attest legislation in 2014. The new UAA definition requires that only CPAs operating within a CPA firm can perform:
- Audits in accordance with Statements on Auditing Standards (SAS);
- Reviews under Statements on Standards for Accounting and Review Services (SSARS); and
- Examinations, reviews, and agreed-upon procedures under Statements on Standards for Attestations Engagements (SSAE).
- Any engagement performed under PCAOB standards.
With federal patent troll legislation stalled in Congress, states also moved this year to stop PAEs, companies that obtain and assert patent rights for the express purpose of filing patent infringement lawsuits against individuals or businesses. The PAEs then seek to obtain licensing fees or a legal settlement rather than actually supporting or developing any products. PAEs often approach small- to medium-sized businesses alleging patent infringement through letters threatening litigation and demanding payment for licensing fees. Their targets have included CPA firms and state CPA societies. Fifteen states passed laws to halt patent trolls this year, and 17 other states have legislation pending or have considered this type of legislation.
Now that most state legislatures have adjourned their 2014 sessions, the American Institute of CPAs (AICPA) State Regulation and Legislation Team is developing a summary of the year’s top state legislative and regulatory issues to date that will be available this fall. The AICPA expects that state legislators will continue to work on definition of attest and patent troll legislation in 2015, as well as on other issues detailed in the summary.
If you have a question about the definition of attest or patent troll legislation at the state level, please contact AICPA Vice President of State Regulatory and Legislative Affairs Mat Young at email@example.com.