January 1999 Issue

LEGISLATING PROFESSIONAL STANDARDS AT THE STATE LEVEL

State boards and state CPA societies throughout the nation are, as has been well reported, diligently considering the third edition of the Uniform Accountancy Act. As part of the process, various aspects of the proposal are being debated. Although there are benefits if all the jurisdictions were to adopt the uniform act in its entirety, that is usually not what happens with uniform acts. Each jurisdiction picks, chooses, modifies, and sometimes adds provisions to fit its particular political situation. It is, after all, a political process.

In Florida, the accountancy statutes were recently modified to allow licensed and unlicensed entities to offer a fourth level of financial statement service called an assembly. The AICPA Accounting and Review Services Committee (ARSC) could not deliver on an exposure draft that would have introduced assembly to the profession through normal channels, so Florida decided to do it by legislation.

The statute and supporting rules give guidance very much like a statement coming from a standard setter. An assembled financial statement is defined to be "providing various manual or automated bookkeeping or data processing services, the output of which is in the form of a financial statement. The function of assembling financial statements includes preparing a working trial balance, assisting in adjusting the books of accounting, and consulting on accounting matters." No form of opinion or assurance is given, but a transmittal letter is required with the statements, and each page of the statements must be marked as to the level of service. The transmittal letter and each page of the statements must state whether or not the entity providing the assembly service is licensed by the Florida Board of Accountancy.

After the law was passed, ARSC put the matter on its agenda to consider whether professional standards could be appropriately modified to accommodate the Florida statute. It appears that ARSC was not able to reach a consensus on making the necessary modifications and the matter was on the agenda for the December meeting of the AICPA board of directors.

On another front, the board of directors of the New York State Society of CPAs, as part of its discussion of the UAA, decided to recommend revision of the New York accountancy statute. The revision would allow CPAs to submit financial information including forecasts and projections, financial plans, and historical financial statements for internal client use only without issuing any transmittal letter or report. It is too soon to determine whether this provision will actually make it into law, but it demonstrates another attempt on the part of CPAs to take standard setting into their own hands.

CPAs in Florida have been put on notice that, if they follow the statute and issue assembled financial statements, their conduct would be lawful in Florida but in violation of the AICPA Code of Conduct for which they could be expelled from the AICPA.

More information about the rules in Florida is available on the Florida Institute of CPAs website at www.ficpa.org. *

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