Many CPA services are excluded from the activities that would require registration as a municipal adviser under new rules approved by the SEC.
Under the regulations, which were scaled back from a previous proposal, CPAs would not be required to register as municipal advisers if they are providing audit or attest services, preparing financial statements, or issuing letters for underwriters, according to a specific exemption given by the SEC.
But CPAs and others who provide certain other advice to municipalities—including tax advice on municipal securities offerings—will be required to register with the SEC as municipal advisers.
The SEC voted unanimously to adopt rules to establish a permanent registration of municipal advisers, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203. The rules are available at tinyurl.com/k5ksxey.
State and local governments that issue municipal bonds often rely on the expertise of municipal advisers to help them decide how and when to issue the securities and how to invest proceeds from the sales. The rules require municipal advisers to register with the SEC if they provide advice on the issuance of municipal securities, certain investment strategies, or municipal derivatives.
The new rules take effect 60 days after they are published in the Federal Register.
The AICPA generally supported the investor protections in the proposed rules but was concerned that the broad definition of “municipal advisor” in the proposed rules would apply to accountants performing customary accounting services who should not have been subjected to the required registration.
AICPA President and CEO Barry Melancon, CPA, CGMA, commended the SEC for its flexibility on the issue. He also acknowledged the support of members of Congress who introduced legislation that would have exempted accountants from the municipal adviser definition.
“Accountants providing audit and attestation services are already
subject to layers of regulation that are intended to protect
investors,” Melancon said in a statement. “We are pleased that the SEC
expanded the accountant exemption to include audit and attestation
engagements, preparation of financial statements, and the issuance of
letters for underwriters.”