AICPA Response to SEC Proposed Guidelines

In an article this month in the Journal of Accountancy, AICPA President Barry Melancon discusses the possible repercussions throughout the entire accounting profession should the SEC's proposed guidelines to limit the scope of services provided by auditors be adopted.

The AICPA position is that proposed ruling is not in the public interest and sites the following concerns:

  • The proposed ruling would handicap accounting firms as they try to grapple with issues in the New Economy.

  • Audit quality will suffer if firms are required to divest themselves of those who provide non-audit services.

  • By reducing the amount of work an accounting firm may perform, audit fees may have to rise as audit clients share a greater percentage of the overhead of accounting firms.

  • Accounting firms will have difficulty recruiting top talent if SEC restrictions cause the firms to inhibit innovation and participation in the new economy.

  • Audit firms will rely more heavily on their audit clients for revenue and may thus feel greater pressure to maintain positive relationships with these clients, potentially impeding independence.

  • Firms will incur additional administrative costs to comply with new regulations; these costs will be passed on to audit clients.

  • Some of the proposed regulations are unspecific, which may provide the SEC with unbridled power to assert lack of independence with regard to any non-audit service.

  • The guidelines promote overregulation without a clear need or direction other than a desire to provide government intervention.
  • The article also discusses the potential trickle-down effect of the guidelines as they will have the potential of permeating the entire accounting community and other regulatory boards.

    You may like these other stories...

    Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
    When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
    Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

    Upcoming CPE Webinars

    Apr 22
    Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
    Apr 24
    In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
    Apr 25
    This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
    Apr 30
    During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.