Why the AICPA Must Act

At its July 1998 meeting, the Board discussed the need to address these issues for a variety of reasons. First, the AICPA’s objectives are to protect the public interest and to provide relevant services for our members. We accomplish those objectives by working closely with the public regulators, including state boards of accountancy and the SEC. Also important is achieving uniformity in the regulation of the profession. Uniformity ensures that CPAs are subject to the same rules and regulations, without regard to their state of origin. Further, nonuniformity of rules increases the burden on CPAs and is a disservice to the public. The Board concluded that the AICPA should address any professional issues that cause state boards to set their own performance and reporting standards and thus erode uniformity.

Second, it is our understanding that Florida’s introduction of an assembly service was strongly supported by the membership of the Florida Institute of CPAs. That same strong membership support has been demonstrated by the New York State Society of CPAs’ Board of Directors which believes the AICPA should establish a financial statement service that is not subject to the requirements of Statement on Standards for Accounting and Review Services (SSARS) No. 1, Compilation and Review of Financial Statements. However, there also is strong AICPA membership support for not allowing practitioners to perform financial statement services outside of SSARS. Most notably, the Texas Society of CPAs strongly opposes any such change. This controversial issue needs to be addressed and resolved.

Third, AICPA members in Florida who perform assembly services are in violation of the AICPA Code of Conduct. The new Florida law creates a dilemma for AICPA members because SSARS No. 1 requires that a CPA at least compile financial statements that he or she submits to a client or others. AICPA professional standards do not recognize an assembly service and indeed, prohibit it. Thus, AICPA members who perform an assembly service in accordance with the Florida rules are in violation of AICPA standards. Currently, the Board has agreed to enforce the Code of Conduct against members in Florida should a complaint be made. The Board’s enforcement position could alienate our members in Florida. Some have suggested that the AICPA suspend enforcement against the members in Florida. The Board felt that this would create an unlevel playing field.

Finally, Florida’s actions may result in potential legal challenges for the AICPA because our rules are more stringent than the rules of the Florida Board. Further, as a self-regulated profession, we should fight to preserve our right to self-regulate. Individual states passing performance and reporting standards for traditional services is an encroachment on that right.

With full knowledge of these issues, the Board began its deliberations. In the Board’s opinion, doing nothing was not an option.