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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session


Posted: June 17, 2015 10:06 PM
From: Senator Patrick M. Browne
To: All Senate members
Subject: Changes to CPA Law
In the near future, I intend to introduce legislation that would make several changes to the CPA Law.

Change to the Definition of Attest Activity:

Under the current definition of attest activity, non-CPAs may currently perform certain attest engagements not originally contemplated under the current statutory language (security and privacy controls, greenhouse gas emissions, etc.). In doing so, these non-CPAs are using the Statement on Standards for Attestation Engagements (SSAEs) developed by the American Institute of CPAs for sole use by CPAs. There is a very real set of risks to the public interest associated with non-CPAs issuing reports utilizing AICPA standards. Specifically, the very real possibility that an end-user will be confused or misled when using a report issued by a non-CPA who suggests or claims to have properly applied AICPA standards developed with the unique hallmarks of a CPA in mind.

Change to Domestic Reciprocity:

A CPA certificate can be issued through domestic reciprocity for individuals who have passed the CPA exam in another state, but for any number of reasons (raising a family, taking care of an aging parent, etc.) have let their license in that other state lapse. When dealing with an individual who is not currently licensed in another state, the board may only issue a certificate when the individual has completed one year of experience, so long as that year of experience was completed within the sixty months prior to applying for the certificate.

This policy has a disparate impact on those who have left the profession for to, most notably, raise a family. My bill proposes to remove the requirement that the applicant complete the year of experience within the previous 60 months.

Exemption to the Private Investigators Act:

Under current law, CPAs practicing in the area of forensic accounting may fall under the scope of the Private Detective Act of 1953. This would require a practitioner to obtain a secondary license in the event that they were to be called as a witness in a legal proceeding. Such requirements are onerous and unnecessary given the current licensing regime set in place to become a CPA. The language I am introducing will ensure that the CPA law is the sole law governing CPAs in the practice of forensic accounting.

Non-CPA Firm Managing Partner:

Last session, I introduced legislation, Senate Bill 884, to allow non-CPAs to act as managing partners in a firm. The concept of non-CPA leadership promotes a realistic standard for today's practice environment and is permitted under the UAA as well as the accountancy laws of most states.

Non-CPA owners are critically important to the effectiveness of the practice in most CPA firms. This is because it would be impossible for CPA owners, alone, to have the entire breadth of education and skill sets necessary to be an expert in every area and aspect of its clients' businesses. This is especially true for CPA firms that do audit work and rely on a team of technology, industry and general business experts to truly understand a client’s business operations.

It is important to note that the UAA permits a non-CPA to be the managing partner/owner of the firm while simultaneously placing limitations on the oversight responsibilities of non-CPA owners. Specifically, the UAA provides safeguards to protect the public interest in relation to non-CPA ownership and non-CPA leadership:
  • CPA firms must be owned by a majority of licensed CPAs. This provision assures that the firm is controlled by CPAs, as the public would expect, and that the appropriate culture is maintained within the firm with respect to the performance of traditional attest services.
  • The person in charge of attest services must be a licensed CPA. This provision helps assure that the code of professional conduct and professional standards are maintained when providing attest services.
  • A licensed CPA in the firm must be designated and identified to the state board as the individual responsible for the proper registration of the firm. This provision empowers the state board of accountancy with disciplinary and enforcement authority over the registered CPA firm.

With the above safeguards in place, CPA firms are able to fully recognize the value of the leadership skills that non-CPA owners can effectively offer to their firms, all while maintaining the public trust in relation to the attest function.

Expungement of Disciplinary Records:

I have included language in my proposed legislation that would allow for the Board of Accountancy to discretionarily expunge the record of a licensee in limited circumstance. After four years, a licensee may apply to expunge a one-time disciplinary action for failing to complete continuing education or practicing on a lapsed license for six months or less. All other disciplinary action would require ten years to pass before the application for expungement could be made. Disciplinary action in the form of suspension or revocation is not expungable.

This allows for a one-time clemency for smaller infractions without the gravity of a permanent record.

Introduced as SB1018