Changes in the Uniform Accountancy Act (UAA) updating the definition of attest and allowing for CPA firm mobility across state borders have been approved by the AICPA and the National Association of State Boards of Accountancy (NASBA).

While the UAA, available at, is nonbinding, it is held up as an example and a reference point by the AICPA and NASBA for best practices in state laws and regulations.

The definition of attest in the newly amended UAA requires that only CPAs operating within a CPA firm can perform:

  • Audits in accordance with Statements on Auditing Standards (SAS);
  • Reviews under Statements on Standards for Accounting and Review Services (SSARS);
  • Examinations, reviews, and agreed-upon procedures under Statements on Standards for Attestation Engagements (SSAE); and
  • Any engagement performed under PCAOB standards.

An exception would be public officials and public employees, who are not prohibited by the UAA from performing any of their duties. So, for example, state audit organizations would continue to be able to perform engagements under the SAS, SSARS, and SSAE.

Changing the definition of attest also brings Reporting on Controls at a Service Organization back inside the services covered by the UAA’s definition of attest.

Over 40% of states already have the revised definition of attest in their statutes. The remaining states are being encouraged by the AICPA and NASBA to modernize their definition to address the public protection concerns raised by unregulated individuals using profession standards.

The UAA also has been updated to provide for CPA firm mobility across state lines under a no-notice, no-fee, no-escape regime.

This would allow firms registered in one state to provide attest services to clients in another state without registering the firm or paying fees in the second state. Under the UAA provisions, CPA firms would be subject to the laws and regulations of both their home state and the second state, and they would have to meet the peer review and CPA ownership requirements of any mobility state in which they are seeking to perform those attest services. CPAs and CPA firms can already provide nonattest services out of state without registering.

The CPA mobility campaign builds off the profession’s individual mobility campaign of recent years.

Individual CPA laws already have been adopted by 51 jurisdictions—49 states plus the District of Columbia and the U.S. Virgin Islands—eliminating the need for individual CPAs to maintain multiple reciprocal state licenses. CPA firms, however, must currently register in any state in which they have a physical presence or wish to offer attest services. The U.S. Virgin Islands in May became the 51st state or jurisdiction to pass an individual mobility law allowing out-of-state CPAs to operate in their jurisdictions without having to obtain a reciprocal license or register in the state.

The U.S. Virgin Islands’ new mobility law will go into effect May 16, 2015. The enacted legislation makes other significant changes to the U.S. Virgin Islands’ accounting statute to more closely mirror the UAA. The legislation updates the definition of attest, eliminates the need for work experience to sit for the CPA Exam, and implements a 150-credit-hour requirement for licensure, making the jurisdiction substantially equivalent to the rest of the United States.

Sixteen states already have enacted firm mobility laws and do not require eligible out-of-state firms to register or pay fees when providing attest services. The inclusion of firm mobility in the UAA could provide incentive for legislation in more states. However, the AICPA and NASBA have indicated that they understand that each state will have to consider state-specific factors in determining whether to pursue a CPA firm mobility law.

  New PCAOB rules are designed to strengthen auditors’ scrutiny of related-party transactions and significant unusual transactions.

Auditing Standard No. 18, Related Parties, requires the auditor to perform specific procedures to evaluate a company’s identification of, accounting for, and disclosure of the transactions and relationships between a company and its related parties.

The new standard also requires communication to the audit committee of the auditor’s evaluation of, identification of, accounting for, and disclosure of its relationships and transactions with its related parties.

New amendments also require specific audit procedures designed to improve the auditor’s identification and evaluation of significant unusual transactions and to enhance the auditor’s understanding of the business purposes of those transactions.

A significant unusual transaction is defined as a transaction that is outside the normal course of business for the company or that otherwise appears to be unusual due to its timing, size, or nature.

Additional amendments require the auditor, during the risk assessment process, to obtain an understanding of the company’s financial relationships and transactions with its executive officers. But the auditor is not required to make a determination about whether compensation for executive officers is reasonable or to make recommendations regarding compensation.

As with all PCAOB standards, the rules must be approved by the SEC. If the standard is approved, the SEC also will determine whether the new requirements would apply to the audits of emerging growth companies.

If approved by the SEC, the new standard and amendments would take effect for audits of financial statements for fiscal years beginning on or after Dec. 15, 2014, including reviews of interim financial information within those fiscal years.

The standard is available at

  Narrowly scoped changes to peer review standards proposed by the AICPA Peer Review Board (PRB) are designed to remove inconsistencies and improve the transparency of reports for engagement reviews.

The proposal, outlined in an exposure draft, available at, would change the impact to an engagement review report when all of the following occur:

  • There is more than one engagement submitted for review;
  • The same deficiency occurs on each of the engagements submitted for review; and
  • There are no other deficiencies.

In this scenario, current guidance calls for firms to receive a “pass with deficiencies” rating in the engagement review report. Under the proposed changes, this scenario would result in a “fail” rating.

Comments on the proposal were due July 5. If approved, the changes would take effect Sept. 1.

  A mandatory audit firm rotation requirement and other audit market reforms have formally became part of European Union law.

Rules published in the Official Journal of the European Union—the authoritative source of EU law—include:

  • A requirement that public-interest entities—which include listed companies, banks, and insurance companies—change auditors after 10 years. This period can be extended to 20 years if the audit is put out for bid, or 24 years in instances of joint audits, in which more than one firm conducts the audit.
  • A prohibition on EU audit firms from providing several nonaudit services to their clients, including certain tax, consulting, and advisory services. Firms will be banned from providing services to audit clients linked to management or decision-making, as well as many services linked to financing, capital structure, and investment strategy of the audited entity.
  • A prohibition on contractual clauses in loan agreements that require the audit to be performed by one of the Big Four firms.

The rules came into force on June 16, and most of the regulations apply beginning June 17, 2016. The prohibition on Big Four-only loan agreements applies beginning June 17, 2017.

  Changes proposed by the International Auditing and Assurance Standards Board (IAASB) are designed to clarify expectations of auditors when auditing financial statement disclosures.

The proposals are available at One of the key areas addressed in the proposals is attention earlier in the audit process to disclosures, including those where the information is not derived from the accounting system.

By focusing on this area, the IAASB aims to address the problem of excessive or immaterial disclosures that may occur when disclosures are prepared and audited relatively late in the audit process, IAASB Technical Director James Gunn said in a news release.

Comments can be made through Sept. 11 at the IAASB’s website at

Where to find January’s flipbook issue

Starting this month, all Association magazines — the Journal of Accountancy, The Tax Adviser, and FM magazine (coming in February) — are completely digital. Read more about the change and get tips on how to access the new flipbook digital issues.


Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.