AGREEMENT REACHED BY THE AICPA/NASBA JOINT COMMITTEE ON REGULATION OF THE PROFESSION

A recent agreement was reached by the AICPA/NASBA joint committee on regulation of the profession. The joint committee was a consequence of the work of the AICPA Special Committee on Regulation and Structure (Mingle Committee). The agreement was unanimously approved by both the Mingle Committee and the AICPA Board of Directors at their meetings in February. As of this writing it had not yet been acted upon by the National Association of State Boards of Accountancy's (NASBA) board of directors.

The major recommendations contained in the joint committee's report as adapted from a letter by Robert Mednick (chair of the AICPA) to the members of AICPA Council are presented below.

Substantial Equivalency. The joint committee recommends that states be encouraged to adopt "substantial equivalency" provisions that will make it much easier for CPAs to practice across state lines--either physically or electronically--and to obtain reciprocity when they relocate from one state to another. The concept is that if a CPA has a license in good standing from a state that utilizes CPA certification criteria that are essentially, or nearly equal to, those outlined in the AICPA/NASBA Uniform Accountancy Act (UAA), then that CPA would be able obtain reciprocity or have the right to practice in any state that has adopted the substantially equivalent doctrine.

One-Tier Licensing. The joint committee recommends a one-tier licensing structure. That is, there would be no distinction between the CPA that performs attest services and those that do not.

Criteria for Licensure. The criteria for obtaining a license under the revised UAA will include completion of l50 semester hours, including a baccalaureate degree after the year 2000 and successful completion of the Uniform CPA Examination. In addition, while there will not be an experience requirement for initial licensure, there will be a more substantive "attest" experience requirement for individuals who supervise attest engagements and sign reports on financial statements on behalf of their firms.

Continuing Professional Education. All CPAs (licensees) would be subject to a CPE requirement. However, the joint committee wishes to let the AICPA and NASBA committees currently studying the area of CPE measurement complete their work before defining that requirement. Hopefully, the new requirement will include a new measurement system that accommodates nontraditional, as well as traditional, modes of learning. In addition, the revised UAA will provide for an "inactive" status (carefully noted in all personal identifications), available for retired CPAs or CPAs not working in public accounting who do not wish to take CPE.

Regulation of CPA Firms. The joint committee's recommendations would require CPAs to practice in a licensed or registered CPA firm only if they are providing attest services. CPAs who do not perform attest services may offer nonattest services (i.e., tax, consulting, etc.), through any type of business entity they choose. However, if a firm of CPAs wishes to be identified as a "CPA firm," even if it does not perform attest services, it will have to register with its state board of accountancy and comply with related requirements such as form of practice and CPA ownership. Moreover, individual CPAs practicing in nonregistered firms would have to comply with state board rules and code of conduct and be subject to the same disciplinary action (Editor's note: presumably the American Express Tax and Business Services situation).

Ownership of CPA Firms. The joint committee's recommendations call for a "simple majority" ownership by CPAs of licensed CPA firms. That is, at least 51% of the voting rights and financial interests in the firm would have to be held by licensed CPAs.

Commissions and Contingent Fees. The joint committee's Report calls for adoption in the revised UAA of the AICPA's rules on commissions and contingent fees. Currently, the Uniform Accountancy Act is silent on these fee issues. Generally speaking, this will allow CPAs to accept commissions and contingent fees with full disclosure except from clients for whom they perform attest services. Again, both the AICPA and NASBA representatives felt these rules make the most sense in today's practice environment

The agreement calls for both organizations to seek authorization for the proposed new UAA from their governing bodies by early summer. *