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Advocating for California CPAs

Governor Vetoes AB 2415 (Ting)

Sept. 30, 2014 — Gov. Brown has vetoed AB 2415 (Ting), would have created a registration requirement for anyone acting as a property tax agent and has been the top priority for the CalCPA Government Relations team this legislative session.

In its original form, the definition of "property tax agent" and the registration requirement in AB 2415 was broad. CalCPA was concerned that the bill would have required CPAs to register with the Secretary of State's Office for services that already fall within the scope of their practice as a CPA.

Prior to the bill being sent to the governor, CalCPA was successful in getting amendments to AB 2415 to exclude the routine day-to-day services that CPAs regularly perform for clients that may bring them into contact with a county assessor or their staff. Even with the amendments the veto of AB 2415 is an important and even more successful outcome to this legislation. It avoids another registration requirement that CPAs potentially would have had to comply with.

Thank you for all your help and involvement throughout the process. Your engagement and leadership made a difference in the final outcome of this bill. When legislators hear from CPAs and members of their communities, it provides the extra push and unique perspective needed to ensure that a difference is made. This collaborative effort between CalCPA members and staff is why CalCPA has been successful in advocating on behalf of the profession over the years.

 

Audit Standards a Hot Issue in Legislature

March 7, 2014—The auditing of cities, counties and other municipalities remains a hot issue in the Capitol. CalCPA has been working to ensure that the auditing and accounting standards remain consistent to those in current law. Some of the issues we’re keeping an eye on include:

Audit Firm Rotation:
Legislation has been introduced to create an oil severance tax, which would create revenue to form and fund the California Higher Education Endowment Corporation—an organization that would annually allocate funds to specified higher education, parks and social service programs. The bill calls for those receiving funding to be audited at least once every six years, with the audits occurring alternately between the three public, postsecondary education entities every two years. However, the bill also mandates that a new audit firm would have to be used every six years.

The Public Company Accounting Oversight Board and the Congressional Budget Office have both explored mandatory firm rotation and determined it would not meet the desired public policy goals.

CalCPA supports this conclusion. Mandatory firm rotation restricts an auditor’s ability to develop a cumulative body of knowledge, including the internal operations and external environment of the audited entity—especially for a specialized entity such as a governmental organization. This can increase audit costs and even lead to increased opportunities for fraud.

Moreover, CPAs and CPA firms already adhere to comprehensive professional standards, including an ethical duty and responsibility to objectivity—especially as it relates to conducting an audit. Additionally, any CPA firm that performs audit services must comply with a comprehensive peer review process overseen by the California Board of Accountancy on a regular basis.

Dissolution of Redevelopment Agencies:
Legislation has been introduced to modify Infrastructure Finance Districts to make them more attainable to local agencies as a way to finance needed public infrastructure projects. Part of the oversight requires regular independent audits. As introduced, the language for the auditing requirements is unclear and inconsistent with current law. CalCPA is working with the bill’s author to ensure that issue is addressed.

A similar proposal that would allow cities to form a community revitalization authority also contains audit language. However, the bill does not identify who will conduct the annual independent financial audits. As drafted, this legislation states that the revitalization authority shall contract for the independent financial audit, and that it shall be conducted in accordance with guidelines set by the California Controller.

While these audits are an important part of oversight of public funds, CalCPA would like to see language that clarifies that the audits must be conducted in accordance with Generally Accepted Government Auditing Standards by a CPA who is licensed by—and in good standing with—the CBA.

CalCPA continues to work with the Legislature and all interested parties to ensure that CPAs who perform municipal audits are not unfairly affected as these proposals move through the legislative process.

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