NASBA Meeting Participants Home in on State and Federal Regulations



T he National Association of State Boards of Accountancy held its annual meeting in October 2003 on Maui, Hawaii. Meanwhile, the public company accounting standards and federal regulations implementing the provisions of the Sarbanes-Oxley Act of 2002 continued to develop. Discussion therefore focused on how the state boards would cooperate with each other, with the Public Company Accounting Oversight Board (PCAOB) and with the SEC to coordinate state accounting laws for both public and private companies with the new federal guidelines in order to best protect the public interest.

Comments from attendees reflected a common understanding that state boards must ensure licensees’ performance deserves the confidence of investors and others who depend on CPA services. David A. Vaudt, NASBA’s incoming chairman and Iowa state auditor, moderated a panel on developing ways to strengthen trust.

One of the panelists, Gail Hillebrand, a public member of the California state board, recommended creating a national database on the reporting of restated financial results, developing state rules for audit documentation and considering rotating the auditors for public companies and large not-for-profits.

In his valedictory address, K. Michael Conaway, outgoing NASBA chairman, encouraged state boards to facilitate interstate practice by eliminating unnecessary differences between state laws and the Uniform Accountancy Act (UAA). He urged state boards to review NASBA’s discussion memorandum, “Answering the SOX Challenge: Guidelines for State Boards of Accountancy,” ( ) which is based on state board members’ comments. NASBA’s UAA committee will use it as a guide when proposing future UAA rules.

Andrew L. DuBoff, vice-president of the New Jersey state board, said it would take time to determine whether regulations derived from the Sarbanes-Oxley Act and the PCAOB accomplish what they were meant to do. DuBoff also said that in the meantime state boards should stay abreast of the positions NASBA, the PCAOB and the AICPA take on Sarbanes-Oxley-related issues.

S. Scott Voynich, AICPA chairman, called for cooperation. “Now, more than ever,” he said, “the state societies, the state boards of accountancy, NASBA and the AICPA have an opportunity and a responsibility to find the right balance, to promote yet protect, to enhance the value of the CPA and the CPA hallmark while continuing to protect the public interest.”

PCAOB member Kayla J. Gillan added that confidence in the capital markets won’t return until not only auditors—but also corporate managers, attorneys, investment analysts and others who played a part in the financial scandals of 2001 and 2002—redeem themselves in the eyes of investors. In addition, she said, Congress, the SEC, the stock exchanges, state boards and legislatures must work together to foster meaningful regulatory compliance. During the PCAOB’s review of firms’ registration applications, she recalled, it questioned firms that employed accountants a regulatory authority had disciplined. Frequently, such firms told the PCAOB not to be concerned about disciplined auditors because they no longer audited public companies. “Firms should not be able to avoid oversight simply by shifting ‘problem’ people from one practice area to another,” she said. “Together we can seek to avoid these types of regulatory gaps.”

An SEC enforcement official also called for closer relations with state boards. According to Spencer C. Barasch, associate administrator and head of the SEC’s Fort Worth, Texas, enforcement office, in 2002 the commission had—nationwide—more than 2,200 open investigations—40% of which involved financial fraud. That same year the number of new investigations that involved financial reporting and disclosure rose 69% from 2001. Barasch said that since both the SEC and state boards have common goals and limited financial and staff resources, “it makes sense to work together when our interests overlap.” For example, the SEC refers to appropriate state boards its enforcement actions involving CPAs. Barasch recommended that boards contact the SEC investigators who worked on those cases to learn which accountants had cooperated with the commission and which had not so state regulators could apply leniency where appropriate.

Diane M. Rubin, NASBA examinations committee chairwoman, and Arleen R. Thomas, AICPA vice-president of professional standards and services, assured state boards that the Institute, NASBA and Prometric—a developer of technology-based testing services—together are meeting all project deadlines for the April launch of the computerized Uniform CPA Examination. They encouraged attendees to stay abreast of related developments by visiting a Web site ( dedicated to the new test.

—Louise Dratler Haberman is NASBA director of information and research and editor of the State Board Report.


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.