NCCPAP Testifies Before NYS Senate Committee
New York State Senator Kenneth P. LaValle, Public Hearing
on the Independence of CPA's in the Post-Enron Era
New York, NY February 11, 2002 - The National Conference of CPA Practitioners (NCCPAP), the only national organization representing only CPA's in public practice, participated recently in hearings conducted by New York State Senator Kenneth P. LaValle, Chair of the New York State Senate Higher Education Committee. The testimony was presented to the panel by Robert L. Goldfarb, CPA and Alan Feldstein, CPA on behalf of NCCPAP.
"As an organization that represents mostly smaller practice units, NCCPAP addressed concerns that actions taken in the "post-Enron era" could have an adverse affect on small CPA firms and their clients. The testimony reiterated the feeling of the NCCPAP leadership and it's members that the public has not lost confidence in the integrity and professionalism of smaller CPA firms that do not engage in Public Company audits," said Alan Feldstein CPA, President, NCCPAP. Several points addressed in the NCCPAP testimony to the panel included the following:
* NCCPAP is in favor of changes to improved regulations on independence for public company audits. The NCCPAP strongly believes in the tenants of objectivity, independence and integrity when performing the attest function for client companies both public and private. In the case of public companies, NCCPAP's leaders agree that there should be segregation between attest function services and consulting services. For non-public companies, segregation and rules regarding consulting should be made clear. However, firms should continue to be permitted to provide consulting services for these privately held companies even if they provide attest services. This position is in agreement with former SEC Chair Arthur Levitt's statements and testimony to Congress given last year on independence in auditing for public companies. This testimony is now part of the Congressional Record.
* NCCPAP supports a New York State required peer review program for CPA firms. Under the current provisions, a CPA firm practicing in New York State does not have any peer review requirements. If a CPA conducts any attest function of companies and the CPA is a member of the AICPA, or is he/she is performing a governmental audit, only then is there any peer review requirement. NCCPAP supports changes to these provisions mandating peer review for CPA firms.
* NCCPAP supports CPA firms ability to providing consulting services. Control environments are different for most small firm clients. In small privately held businesses, internal controls with respect to separation of duties may be lacking. Some form of consulting will actually facilitate the audit process and may, in fact, be necessary for an examination of the complete financial statements. In addition, it is NCCPAP's position that tax services should not be redefined as a consulting service.
* NCCPAP believes the marketplace regulates CPA firms.
A reputation for poor work by a CPA firm including a serious audit failure would tarnish an accounting firms reputation with their local business community it relies upon for it's very existence. A lack of quality work and professional integrity could and would effectively put a CPA firm out of business.
"The leadership of NCCPAP is committed to remaining part of the current debate that is likely to forever change the practice of public accountancy in this country," said
Robert Goldfarb CPA, Immediate Past President, Issues Committee Chair for NCCPAP.
It is NCCPAP's mission will remain: To be sensitive and responsive to NCCPAP's importance to the profession, and to the special needs of individual CPA practice units and local regional CPA firms: To encourage a commitment to quality, integrity and public responsibility within the public accounting profession: To enhance the status of the Certified Public Accountant, and make commitments to further excellence as a profession as we work in the Twenty-First Century. Additional information about the National Conference of CPA Practitioners can be found at www.nccpap.org on the Internet.