Professional Issues

Weve Seen the Future, and Its Florida

Since 1994, American Express, the state of Florida and thousands of CPAs under the authority of the state board of accountancy have been playing out a regulatory drama — who can “hold out as a CPA.” It appears to be in its final act: Florida will now concern itself with what CPAs do, not where they are. What does this mean for Florida CPA practitioners? CPAs in traditional firms will see little change: Theyll still be licensed professionals in licensed firms with all services regulated. But CPA practitioners employed by a nonlicensed entity, such as Amex, to perform tax, consulting and other nonattest engagements will also fall under the authority of the state board. The state will regulate their services, too. And these practitioners will be able to hold themselves out as CPAs.”

“I think every state that finds itself in the same position as Florida will be forced to adopt our model,” Lloyd A. “Buddy” Turman, executive director of the Florida Institute of CPAs, told the Journal . “If you assume its in the best interest of the public and profession to regulate everything CPAs do, this regulatory arrangement is the solution.”

Who can do what?

The attest function is still the monopoly of the traditional, licensed CPA firm. CPAs in nonlicensed firms can prepare basic financial statements — but can they perform compilations? “First of all, Im very cautious about using the term compilation ,” said Turman, who believes its used indiscriminately. “If by compilation you mean a SSARS no. 1 financial statement with the accompanying report, the answer is no; these are still limited to licensed firms.” However, according to Turman, Florida will need a so-called fourth level of financial reporting that will fall between SSARS no. 1 and general accounting services. “Theres no question this would help CPAs in nonlicensed firms keep their clients happy.” Florida has to iron out the details. A preliminary draft of regulations for these “assembled financial statements” requires CPAs to inform their clients that they are not providing any assurance. Those employed by Amex, for example, will have to add that the entity they work for is not licensed by the state board.

American Express appears satisfied with the extent of the reform. “Is American Express happy? Oh, yes,” Amex spokesman Richard DAmbrosio told the Journal . He emphasized that the new regulations maintain the credibility of the CPAs, which is what Amex wanted. When asked if Amex had wanted its CPAs to be able to do SSARS no. 1 engagements, DAmbrosio would only say, “We asked for several things, and were happy with what the state agreed to.”

The AICPA is responding to Floridas changes; more on any developments will appear in a future issue of the Journal . Those interested in more details of the Florida regulations and a history of the lawsuits that led to these changes should see “An Agenda of Change: Legislative Victories for Public Accounting,” Florida CPA Today , June 1998, page 4. The article is also available free online at www.ficpa.org.