SEC Exempts Accountants from Municipal Advisor Registration
by Terri Eyden on
By Jason Bramwell
The US Securities and Exchange Commission (SEC) last month adopted rules establishing a permanent registration regime for municipal advisors as required by the Dodd-Frank Act; however, an accountant who provides audit or other attestation services will not have to register as a municipal advisor.
The new rule approved by the SEC on September 18 requires a municipal advisor to permanently register with the SEC if the advisor provides advice on the issuance of municipal securities or about certain "investment strategies" or municipal derivatives.
State and local governments that issue municipal bonds frequently rely on advisors to help them decide how and when to issue the securities and how to invest proceeds from the sales. These advisors receive fees for the services they provide.
Prior to the passage of the Dodd-Frank Act in 2010, municipal advisors were not required to register with the SEC like other market intermediaries. According to the SEC, this left many municipalities relying on advice from unregulated advisors, and they were often unaware of any conflicts of interest a municipal advisor may have had.
After the Dodd-Frank Act became law, the SEC established a temporary registration regime, and more than 1,100 municipal advisors have since registered with the SEC.
While the SEC's definition of municipal advisor in the original proposed rule would not have required accountants who perform audits of financial statements to register, the rule would have encompassed accountants who perform other audit and attestation services, according to Barry Melancon, CPA, CGMA, president and CEO of the American Institute of CPAs (AICPA).
The final SEC rule states accountants do not have to register as municipal advisors if they provide accounting services that include audit or other attest services, preparation of financial statements, or issuance of letters for underwriters.
"Accountants providing audit and attestation services are already subject to layers of regulation that are intended to protect investors," Melancon said in a written statement on September 27. "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. We commend the SEC for its flexibility on this issue."
The new rules for municipal advisor registration become effective sixty days after they are published in the Federal Register.
You may like these other stories...
Hertz and Icahn make peaceThere won’t be any nasty, protracted proxy battle between Hertz Global Holdings and activist investor Carl Icahn. The rental car chain agreed last Thursday to give Icahn – who has...
Following other recent high-profile hacking events, investigators discovered yesterday that hackers broke into the draft work paper files of several famous CPA firms. Revealing images of the scantily clad documents have been...
Majority of House of Representatives urges leadership to preserve cash method of accounting for tax purposesA bipartisan majority of the House of Representatives – 233 members – has signed a letter urging House...
Upcoming CPE Webinars
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.