NASBA urges uniformity among state boards

By Carol W. Kirwan, CPA
MACPA Director of Technical Services and Regulatory Affairs

"Shaping the Regulatory Environment" was the focus of the annual meeting of the National Association of State Boards of Accountancy, held Oct. 6-9 in New Orleans. State boards are considering what changes should be made to the regulation of all CPAs in their individual states in light of the highly publicized "accounting failures."

In his opening remarks, NASBA Chair Barton Baldwin urged member boards to adopt uniform ethics rules, such as the AICPA Code of Ethics, and to increase their scope of investigations to better ensure the public is being protected.

Mr. Baldwin also strongly pushed for state boards to adopt the Uniform Accountancy Act and the uniform rules for substantial equivalency. There was a great deal of focus on the concept of substantial equivalency at NASBA's annual meeting. It is felt the public interest can better be served by simplifying compliance for CPAs practicing across state lines. While we appreciate the benefits CPAs would enjoy through uniformity of ethics rules, accountancy laws and the ease of practice across state lines, we recognize the importance of compliance with laws and regulations and the disciplining of those who violate them.

We were relieved to hear Mr. Baldwin indicate that state boards should continue to work with state legislatures in their quest to pass regulatory reform which could penalize — instead of protect — the public. This means in many cases that state boards and state CPA societies will work together for meaningful reform in their states.

Incoming AICPA Chair Bill Ezzell told the state boards they will have a critical role in dealing with the aftermath of the accounting scandals. He said there is "no silver bullet" that will restore the profession's credibility. The importance of the CPA in capital markets has been validated and we will need to have a higher level of compliance. States will face significant pressure to install accounting reforms and disciplinary measures. But the move to change the role of CPAs as auditors could have a devastating "mudslide" effect, which Ezzell said is much uglier than a "cascade" effect. The relationship of a CPA in small business is a different environment and should not be treated the same as publicly traded companies. Ezzell also supported a more consistent state-based system of regulation.

NASBA's greatest interest is for one of its representatives to serve as a member of the soon-to-be-formed Public Company Accounting Oversight Board. NASBA officials believe they have the experience and expertise in the regulation of the CPA profession. NASBA also will push for more rapid receipt of information on investigations into violations, in order to take appropriate actions to protect the public on a more timely basis.

Where's the new talent?

Also at NASBA's annual meeting, Lee Seidler, a former professor at New York University's Graduate School of Business Administration, said the profession's real problem is a lack of new talent. According to Mr. Seidler, top graduates are going into graduate programs, and there are not enough graduate programs in accounting. Therefore, these top students do not go into accounting.

Mr. Seidler also said there is insufficient training in ethics and integrity within the profession. He suggested that states raise the 150-hour requirement to a graduate degree to improve the quality of entrants into the profession.

Mr. Seidler was not the only speaker who believes the profession is losing its best students to graduate programs and that the profession should require a graduate degree. According to Brigham Young University professor Steve Albrecht, students need analytical and decision-making skills to face today's challenges. He said educators know what needs to be done, but the faculty does not have incentives or the budget to make the necessary changes. Mr. Albrecht warned that eliminating the 150-hour requirement would result in "dumbing down" the profession at a time when most students and professionals want graduate degrees and the profession needs an enhanced image.

States were encouraged by NASBA to adopt the Uniform Accountancy Act and to not make changes to those provisions — including changes to the 150-hour provisions. In this current environment, it is even more important to come together for strength in unity and strive for uniformity. State boards were cautioned that if states are not uniform, we might wind up with a national model regulating the CPA profession. From the public point of view, they will not understand why differences exist in the regulation of CPAs in various states.

Incoming NASBA Chair Michael Conaway echoed this sentiment in his inaugural remarks. "We must continue to strive to eliminate differences and barriers between our states," he said, adding, "It is a great time to be a regulator."

Referring to the challenges and opportunities facing the profession, Mr. Conaway said, "To use a phrase from the military, 'We have a target-rich environment.'"

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