Regulatory topics to watch in 2017

Written on Jan 24, 2017

Accounting and auditing
By Laura Hay, CPA, CAE

Reinforcing the commitment of the National Association of State Boards of Accountancy (NASBA) to jurisdictional boards, NASBA Chair Ted Lodden, CPA, and Ken Bishop, president and CEO, visited the regular meeting of the Accountancy Board of Ohio (ABO) on Dec. 6 to outline current priorities.

Topics to watch in 2017 include:

Big data

Data analytics has been recognized by the profession as a critical career skill for the future, reflected in the increased emphasis on the CPA exam and in university curricula. As accounting and auditing services transform through the use of data analytics tools, has the regulatory model kept pace? Have current CPAs obtained the competencies to accept responsibility for “what’s happening inside the black box?”

These questions have implications for the career path, talent development and evolution of professional standards, and how regulators prepare in developing their own resources and approaches.

With increased reliance on data, cyber security is also intensifying as an area of focus, resulting in professional standards developments and new professional obligations, including the potential for broadening attestation services and evolving enforcement.

International mobility

NASBA and its counterparts serve an important role evaluating the equivalency of credentials from other countries to determine whether practice privileges should be extended to ease accounting across national borders. This is currently accomplished via Mutual Recognition Agreements with countries such as Canada, Ireland and Australia.

Recognizing the increased globalization of business, a NASBA proposal on the International Pathway Exam would amend the Uniform Accountancy Act (UAA) to provide a pathway to the U.S. CPA license for individuals with qualified designations from countries that do not have a reciprocal relationship with the U.S. The individual would apply to a board of accountancy for a U.S. license and would be required to pass the International Qualification Exam.

NASBA is also offering international administration of the CPA exam in Japan, Brazil, Bahrain, Kuwait, Lebanon and the United Arab Emirates. Successful candidates must apply through a participating U.S. jurisdiction.

Future of learning

NASBA and AICPA released revisions to the Statement on Standards for Continuing Professional Education Programs, effective Sept. 1, 2016. Reflecting changes in current learning models, the revisions include nano-learning (10 minute learning increments) and blended learning delivery methods.

Thought leaders in the profession, including The Ohio Society of CPAs, continue to explore the regulatory model for learning developments such as competency-based measurement.

Use of credentials

While there are many prominent accounting credentials that are understood in the marketplace and are unlikely to cause public confusion, other competing credentials have been introduced including use of terms such as “professional accountant” that have greater potential to mislead.

The UAA committee is working on draft language more expressly permitting credentialing in fields such as management accounting, but also more specifically defining restrictions for non-CPA accounting credentials. Committee members think that more explicitly addressing credentials is preferable to interpreting statutes and rules that are silent on the topic, or adopting inconsistent state requirements.

Assurance quality and developments in peer review

NASBA and OSCPA strongly support initiatives to strengthen the peer review process and increase transparency. Regarding an AICPA proposal to raise the requirements for peer review administering entities, NASBA’s chief concern is preserving high quality accountancy board oversight.

Only boards of accountancy can issue and revoke CPA practice privileges, and NASBA is prepared to work with local boards and the profession investigating new approaches to address quality threats.

Pipeline and diversity

The OSCPA executive board has identified pipeline initiatives and diversity and inclusion as areas of strategic priority for the profession. Programs jointly supported by OSCPA and The Ohio CPA Foundation reach thousands of high school and college students each year, making them aware of in-demand accounting careers.

NASBA supports research and tracks statistics on programs and regulatory models more likely to result in paths to the CPA, and the decision-making process of various demographics to assist boards. NASBA also promotes board engagement on campuses. The ABO has conducted meetings on university campuses in Ohio to engage a number of students in the work of the board.

Outcomes of changes in U.S. leadership

The outcomes of U.S. Presidential and Congressional elections have the potential to impact the regulatory climate, including the Affordable Care Act, Sarbanes-Oxley, Dodd-Frank, the Supreme Court and judiciary and the tax code. OSCPA works closely with AICPA on these and other federal issues to best represent the interests of our members, while NASBA monitors emerging issues and alerts and assists boards in responding.

The Ohio Society of CPAs keeps a close and active watch on these and other regulatory and legislative developments facing our profession, and partners and advocates with the ABO when appropriate to drive a strong climate for Ohio business and supporting the integrity of the profession in serving the public interest.

Laura Hay, CPA, CAE, is executive vice president of The Ohio Society of CPAs and staff liaison to the Accounting & Auditing Committee. She can be reached at Lhay@ohiocpa.com or 614.321.2241.

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