The AICPA and NASBA Boards of Directors recently approved revisions to the Uniform Accountancy Act that provide guidance to state boards of accountancy and CPA firms on what firm names are and are not misleading.
The approval by both organizations’ boards is the culmination of nearly two years of work by the AICPA/NASBA Joint Uniform Accountancy Act (UAA) Committee. The Uniform Accountancy Act is a model bill designed to promote uniformity in the regulation of the practice of public accountancy.
The changes add language and commentary to the UAA allowing the use of network firm names under certain circumstances. The NASBA Board of Directors also approved modifications to the NASBA Model Rules that deleted a prohibition against the use of fictitious names, clarifies what is and is not a misleading firm name and under what circumstances a network name can be used, and adds commentary encouraging state boards to allow firms operating in multiple jurisdictions to use a name approved by a board in another jurisdiction.
“Not only do the revisions provide the statutory and regulatory framework to CPA firms and the state boards of accountancy that regulate them,” Kevin Currier, chair of the AICPA’s UAA Committee said, “but the revisions also protect the public from CPA firm names which may be considered misleading.”
The AICPA and NASBA began considering these firm name issues in August 2008 when the leadership of the two organizations called for the formation of a joint group to study CPA firm names. The study group was formed because current state rules regarding firm names are often too restrictive and do not reflect the current status of practice, including the use of brand and network names. In addition, there is a lack of uniformity in the approval of CPA firm names at the state level, and there was an increasing concern that firms operating in multiple jurisdictions are being unduly impacted by a state board of accountancy’s decision not to allow certain names that have been approved in other jurisdictions.
The study group, which was made up of members of the AICPA’s Professional Ethics Executive Committee (PEEC) and NASBA’s Ethics Committee, published a White Paper on CPA Firm Names in August 2009. In the conclusion, the White Paper urged the AICPA and NASBA UAA Committees to use the discussion and conclusions to help make appropriate conforming revisions to the UAA Statute and Model Rules.
The UAA Committee formed a task force in the fall of 2009 to study the issue and, approximately a year later, language was submitted to the AICPA and NASBA boards for exposure. After an extended comment period, and consideration of 23 comment letters received from state boards of accountancy, state CPA societies, CPA/SEA and several CPA firms, the changes were finalized by both the AICPA and NASBA Boards of Directors.