Getting into Position

Getting into Position
Accounting and Auditing Division Goes to Bat on Practice Issues

By Paul Warner

Continued from the Home Page

The New York State Society of CPAs’ Accounting and Auditing Division has entered an era of increased participation in the formation of public policy recommendations since the Sarbanes-Oxley Act passed in 2002.

Prior to that sweeping reform legislation, the division—which includes the Accounting and Review Services Committee, the Auditing Standards and Procedures Committee and the Financial Accounting Standards Committee, among others—primarily commented on Financial Accounting Standards Board proposals, while coordinating annual conferences.

But in the last three years the Society has placed an increasing importance on the committees’ work, resulting in a plethora of comment letters on emerging regulations, and a number of proposals for new regulations. These committees have become among the most important technical committees in the Society, as such activity impacts every aspect of accounting and auditing issues.

The division’s oversight committee reviews and synchronizes the policy recommendations of the division’s seven committees with the policies of the Society. The chairs of the division—which also includes the Government Accounting and Auditing Committee, the International Accounting and Auditing Committee, the SEC Practice Committee and the Technology Assurance Committee—sit on the oversight committee to help ensure consistency in the positions the Society takes on important issues.

Such efforts are ongoing. In February 2005, the Society released comments, originating in the Auditing Standards and Procedures Committee, on the Public Company Accounting Oversight Board’s proposed rules concerning independence, tax services and contingent fees. It has commented on FASB Staff Position FIN 46(R)-b on implicit variable interests resulting from related party interests under FASB Interpretation No. 46. It has taken a position on the International Federation of Accountants (IFAC) Exposure Draft ISA 230 (Revised), on audit documentation; the PCAOB’s Staff Questions and Answers on the Audits of Financial Statements of Non-issuers performed pursuant to PCAOB standards; and it has commented on the negative effects of SEC’s SFAS 150 on business succession plans of broker-dealers.

The division has had an influence. Last June, the Society submitted comment letters that helped bolster the Financial Accounting Standards Board’s efforts to require reporting of share-based compensation at a time when some parts of the public and certain members of Congress resisted the idea. Statement No. 123 passed late in 2004, and will go into effect this June.

A Society letter submitted to FASB regarding its fair value measurement proposal also contributed to the board’s consideration of relevance and reliability requirements.

Many of these issues are ongoing, but a glance at the work that the committees of the division have done even over the last 12 months shows that we are raising our voices and being heard.

The division is a tight-knit group, with the oversight committee providing assistance on the direction the committees are taking, coordinating their activities and assisting them in developing committee action plans.

The committee also assists the NYSSCPA’s Board of Directors and Executive Committee on accounting and auditing technical matters. For example, it liaises between a commenting committee and the Executive Committee and the Society President who gives his or her final approval to comment letters.

Paul Warner is the chair of the NYSSCPA’s Accounting and Auditing Oversight Committee and chairperson and professor of the Department of Accounting, Taxation, and Legal Studies in Business at Hofstra University.