Posted: | April 2, 2014 05:38 PM |
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From: | Senator Patrick M. Browne |
To: | All Senate members |
Subject: | Changes to CPA Law re: non-CPA Partner |
In the near future, I intend to introduce legislation that would amend the CPA Law regarding non-CPA’s. Specifically, this language mirrors the Uniform Accountancy Act (UAA) standard language to allow firms in Pennsylvania to have flexibility with a managing partner not being a CPA. Several changes to the regulation of CPA firms have been made to protect the public in relying on traditional attest services, while also accommodating the changing structures of CPA firms offering other services to the public. The concept of non-CPA leadership promotes a realistic standard for today's practice environment and is permitted under the Uniform Accountancy Act (“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. Today’s business environment has grown increasingly complicated. Global competition, the complexity of business structures and transactions, innovative financial instruments and transactions, and rapid technological breakthroughs are the norm and not the exception. Auditing both large and small organizations has become an increasingly sophisticated challenge, requiring highly skilled professionals, who are not CPAs, but who are certainly an essential part of an audit team. With the ability to use state of the art tools and methodologies, these individuals employ their expertise, in technology, industry, and general business to penetrate and understand clients’ business operations. The greater an audit team’s insight into a client's operations, the more likely it is that key audit risks will be identified and business complexities and transactions will be fully understood. Therefore, while these professionals are not CPAs themselves, the talents they bring to the audit process clearly enhance overall audit quality. Consequently, CPA firms have a strong need to attract and retain high caliber non-CPAs who have an expertise in these areas. CPA firms would like to provide non-CPA owners with growth and leadership opportunities, without relinquishing control over the attest function. Accordingly, the possibility of a leadership role is a significant draw to highly talented individuals. These advancement opportunities for non-CPAs allow the CPA firm to remain competitive when attracting non-CPA professionals from the workforce. This competitive edge in the workplace is especially vital for smaller CPA firms that cannot compete solely on the basis of salary; in such instances, advancement into a leadership role is an important incentive to balance out any apprehension over salary. More importantly, however, is that the ability to serve in a leadership role vests the non-CPA professional in the success of the CPA firm. 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:
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. |
Introduced as SB884