Compilations Reserved for CPAs. Inherent in the Board’s options is the belief that compilations should be reserved for CPAs. The Board believes that knowledge of auditing is required to perform a compilation, and, as such, the service should be reserved for CPAs. The Board found this argument compelling.

Need for Compilations. The Board briefly discussed the importance of compilations to AICPA members. Compilations historically, have been an important service to creditors, investors, and management because they provide these users with information that assists them in making financial decisions. SSARS No. 1 has set the performance and reporting standard for these services for over 20 years. Although it can be argued that SSARS needs revision based on changes in technology and practice, as a standard, it has served the public and the profession well.

Enforcement. The Board discussed with the Professional Ethics staff ET Section 91.02, Applicability, of the Code which states, "… a member may be held responsible for the acts of all persons associated with him or her in the practice of public accounting whom the member has the authority or capacity to control."

The Professional Ethics Division reported that in current enforcement practice, the Division typically contacts the traditional CPA firm and requests the name of the individual(s) responsible for the engagement (e.g. engagement partner). The firm contact is usually the managing partner and an AICPA member or his or her designee. If the contact does not cooperate with the ethics division, an ethics proceeding may be initiated against the contact for failure to cooperate with the ethics division as defined in the Institute’s bylaws. Accordingly, cooperation is generally the rule.

A question arises, however, as to the character of and commitment to the public interest and the profession of non-CPA-non-member management of a company (public or otherwise) that supervises or controls the activities of an AICPA member who performs compilation services. If the corporate name is signed on a compilation report, the ethics division may be unable to identify the individual responsible for the compilation engagement and may have no recourse against any other individual employed by the non-CPA owned company. The company could dictate that its employees not cooperate, and could argue that the corporation, not the individual compiled the financial statements.

The Board discussed one solution that would require each member to indicate his or her name on any compilation report issued by a non-CPA owned firm, similar to Florida law for assembly services, and to prohibit CPAs working for non-CPA owned firms from issuing compilations if they do not comply. If Council supports the Board’s conclusions, the Board will ask the ethics division and the ARSC to consider this proposed solution.

Taking into consideration all the issues discussed above, the Board decided to present Council with the option of amending the AICPA governing rules to permit all CPAs to compile financial statements under SSARS No. 1.