Financial Services Regulation: What’s at Stake for CPAs?

The Senate is in the throes of a debate regarding financial services regulation reform. Several issues being debated could greatly impact CPAs, and the VSCPA, AICPA and other state societies are working together behind the scenes to communicate the profession’s thoughts and concerns to legislators. Here are some of the top issues:  

• The CPA profession is currently working to ensure a carve-out for CPAs from oversight under the Consumer Financial Protection Agency, should it be established.
• There will potentially be a provision to increase aiding and abetting liability from a “knowing” standard to a “knowing or recklessness” standard for cases brought before the SEC. We are working to limit lowering the current standard of liability for CPA firms and to prevent plaintiffs’ ability to sue CPAs in civil cases. We feel the SEC, under its broad enforcement powers, already has the necessary authority to pursue the appropriate parties for aiding and abetting effectively.
• There is a proposal to exempt from audits of internal controls under SOX 404b any SEC filers with less than $75 million in market capitalization. The profession is opposed to any changes to SOX audits of internal controls because investors of all companies, regardless of size, deserve the same protections.
• There have been discussions of proposals to diminish the independence of private sector accounting standard setting under FASB. The profession is adamantly opposed to any proposals to allow regulators or legislators to change accounting standards.

Senate Republicans agreed yesterday to start a full-scale debate on toughening financial services regulation, which means we’re likely to see news in the coming weeks. CPAs, and the organizations that represent them, must remain part of the conversation.