The American Institute of CPAs (AICPA) and National Association of State Boards of Accountancy (NASBA) have released a new edition of the profession’s model state act (the Uniform Accountancy Act). Released on May 20, the new Uniform Accountancy Act (UAA) contains important additions related to both the definition of attest and CPA firm mobility.
The revised UAA definition of attest states that all engagements performed under the Standards for Attestation Engagements (SSAE) can be performed only by licensed CPAs operating within a CPA firm licensed in the United States. Before the change, the only SSAE included in the UAA definition of attest was examinations of prospective financial information.
The need to revise the definition of attest originated after the definition was unintentionally changed when the AICPA’s Statement on Auditing Standards (SAS) 70 was reissued as SSAE 16. The change resulted in these services no longer being covered under the UAA definition of attest. The question then arose as to whether other SSAEs should be covered under the UAA definition of attest. As the marketplace for attest services and the needs of clients have been changing, the AICPA and NASBA identified potential public protection “loopholes” in the attest definition. CPAs increasingly are requested to provide assurance on a growing list of client needs that were not envisioned when the original attest standards were written. These include sustainability reports, cloud computing, and internal control reports. Since these were not covered under attest services, non-CPAs operating outside of CPA firms have been offering them and issuing reports using AICPA standards. Attest services are a unique set of services that require the competency and expertise of a qualified CPA to be performed. Both the AICPA and NASBA questioned whether non-CPAs can appropriately apply AICPA standards and reporting language. Also, there is concern that the public may be misled when these non-CPAs offer these services using AICPA standards.
Currently, 21 U.S. jurisdictions have attest language in their accounting statutes similar to the public protection language contained in the new UAA. Five have taken action this year (Alabama, Arizona, Georgia, Indiana, and the U.S. Virgin Islands), and many more have indicated that they plan to update their statutes in 2015 or 2016. It is important for states that have yet to update their accounting statutes to consider doing so, and the AICPA is strongly committed to working with state CPA societies, NASBA and state boards of accountancy to see definition of attest legislation passed in all of the remaining U.S. states and jurisdictions as soon as possible.
The new UAA also includes language permitting CPA firm mobility, which allows a CPA firm to provide attest services in another state where it is not registered and does not have a physical office, under a “no notice, no fee, no escape” system. Under firm mobility, the firm is subject to the full regulatory oversight of the state it is visiting as well as the firm’s home state. In addition, in order to qualify for firm mobility privileges, a CPA firm must meet the peer review requirements and CPA-ownership requirements of the state in which it is seeking to practice. If the firm cannot meet those requirements, then it must obtain a license in the practice privilege state before providing attest services there. The inclusion of firm mobility in the UAA could provide incentive for legislation to be introduced in more states. However, the AICPA and NASBA understand that each state will have to consider state-specific factors in determining whether or not to pursue a CPA firm mobility law.
For more information on the new 7th Edition of the UAA, please contact Mat Young, Vice President, State Regulatory and Legislative Affairs at firstname.lastname@example.org.