TXCPA Testimony at the Sunset Review Commission Public Hearing

Testimony of Stephen Parker
Chairman, Texas Society of CPAs:

Mr. Chairman and members of the Sunset Commission, thank you for the opportunity to speak today.  My name is Stephen Parker.  I am a Texas CPA and serve as the current Chairman of the Texas Society of CPAs.  I will keep my comments brief and encourage you to consider the more extensive written comments that TSCPA submitted to the Commission.  

We support many of the recommendations in the Sunset Staff Report and appreciate the work of the staff and the Commission. 

There are a few recommendations we would like to specifically address: 

First, we are opposed to the recommendation to change the composition of the State Board of Public Accountancy to require a majority of public members.  We are pleased the Commission has decided to defer on this recommendation and will ask the legislature to take a broader look at the appropriate approach for all boards in Texas as a response to the concerns raised by the N.C. Dental Board case.  

Second, we take exception with the recommendations to make changes to the TSBPA’s Peer Review rules.  The staff recommendation to allow CPAs who only perform Compilations, or only perform a few Compilations a year, to undergo peer review on a less frequent basis would not be in the best interest of the public.  The likelihood is that there is a greater potential for the quality of service to be substandard the less frequently a CPA performs such services.  The public relies on these financial statements to make lending and investment decisions.  Therefore, it is critical that Compilations are performed correctly and comply with professional standards. 

If Texas alters its requirement, it has the potential to create mobility problems for Texas CPAs who wish to practice in other states using their Texas license.

We also disagree with the staff recommendation for the TSBPA to require TXCPA to stop charging a non-member fee to CPAs who participate in our peer review program.  Current rules allow any organization to establish a peer review program if it is conducted in accordance with the standards for peer review.  Our peer review program operates without any state support and is financially supported by our members.  We should have the ability to cover the costs of our program and charge a non-member fee as long as those fees are reasonable and not excessive.  

Finally, there was a recommendation in the Sunset Staff Report that all licensed CPAs undergo a fingerprint-based criminal background check.  We understand the need for this requirement and note that it is applied to other licensed professionals in Texas, as well.  We would recommend that this recommendation be modified so that licensed CPAs who are in “retired status” with the TSBPA not be required to undergo this background check.

Again, thank you for the opportunity to offer our comments and input to this process.  We would be happy to answer any questions or provide additional information that may be helpful to the Sunset Commission as it completes its work.

 

Testimony of John Sharbaugh
Managing Director of Governmental Affairs, Texas Society of CPAs:

Mr. Chairman and members of the Sunset Commission, thank you for the opportunity to be here today and provide a few comments regarding the Sunset Review process for the Texas State Board of Public Accountancy. My name is John Sharbaugh and I am the Managing Director of Governmental Affairs for the Texas Society of CPAs.

There are two additional areas that were not addressed in the Sunset Staff Report that we would ask you to consider as possible legislative changes, as they both relate to reducing regulatory burdens that do not serve the public interest.   

The first item relates to the mobility of CPAs and the ability to practice across state lines.  Several items in the current Texas Public Accountancy Act already support this concept.  We would recommend adding “attest services” to the existing mobility provisions in the Act.  Currently, all other services that CPAs provide are covered and we see no valid reason to exempt attest services from these provisions.  This would also align Texas with most other states that permit these services to be offered in their states by Texas CPAs and are consistent with provisions promoted in the AICPA/NASBA Uniform Accountancy Act.

In addition, we encourage the Commission to modify the current law to allow CPA firms with non-CPA owners to place such individuals in management positions within the firm and be managers of offices of the firm.  The current Act prohibits this, yet the non-CPA owners in the firm must be registered with the TSBPA and meet several other requirements, such as being actively involved in the firm offering services to clients or the firm itself.  Also, there are requirements that all attest services in the firm must be under the supervision of a CPA and a CPA must be responsible for the firm’s registration with the State Board.  We think these various provisions are enough to protect the public and the firm should be able to make the decision about which members of the firm are best suited to manage office operations.  Making this change would also bring Texas into alignment with how most other states handle this issue and it is consistent with other changes the Sunset Staff is recommending to remove arbitrary and unnecessary barriers for non-CPA owners.

Again, thank you for the opportunity to offer our comments and input to this process.  I am happy to answer any questions or provide additional information that may be of assistance.