Notice of Comments Issued [35 Pa.B. 2973] Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b).
The Commission has issued comments on the following proposed regulation. The agency must consider these comments in preparing the final-form regulation. The final-form regulation must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.
Reg. No. Agency/Title Close of the Public
Comment PeriodIRRC
Comments Issued16A-559 State Board of Accountancy
Revision of and Deletion of Existing Regulations
35 Pa.B. 1573 (March 5, 2005)4/4/05 5/4/05
State Board of Accountancy Regulation #16A-559 (IRRC #2465) Revision of and Deletion of Existing Regulations May 4, 2005 We submit for your consideration the following comments that include references to the criteria in the Regulatory Review Act (71 P. S. § 745.5b) which have not been met. The State Board of Accountancy (Board) must respond to these comments when it submits the final-form regulation. The public comment period for this regulation closed on April 4, 2005. If the final-form regulation is not delivered within 2 years of the close of the public comment period, the regulation will be deemed withdrawn.
1. General.--Consistency with statute; Reasonableness; Clarity.
Redundancy of provisions
The Board states in its Preamble that it is deleting numerous provisions found in 49 Pa. Code Chapter 11 because they are repeated verbatim from the CPA Law. The House Professional Licensure Committee (House Committee) has requested that the Board retain language found in the Act to facilitate ease of use by licensees. We agree with the House Committee and recommend that the Board retain the statutory language in the regulation, and if needed, update the regulation to reflect changes to the CPA Law. If the Board doesn't reinstate the statutory language, it should add cross-references in the regulation to the appropriate sections of the CPA Law.
Recognized standard setting bodies
In Section 11.21 (relating to independence) and Section 11.27 (relating to auditing standards and other technical standards), the Board lists a number of recognized public and private standard setting bodies that publish rules and regulations that a licensee must abide by. The House Committee has requested that the Board add the Public Company Accounting Oversight Board (PCAOB) to the list of standard setting bodies that the Board will recognize. It is our understanding that PCAOB was not in existence when the Board drafted this regulation. We concur with the House Committee and ask that the Board include PCAOB as a recognized standard setting body in the appropriate sections of the final-form regulation. Additionally, the Board should provide a definition of PCAOB in the definition section.
2. Section 11.1.--Definitions.--Consistency with statute; Clarity.
As discussed previously, we recommend the Board repeat the statutory definitions found in the CPA Law or add a cross references to those definitions.
3. Section 11.5.--Temporary practice in this Commonwealth.--Consistency with statute; Reasonableness.
In Subsection (a), the Board is proposing to delete the phrase ''or other jurisdiction of the United States.'' Subsections (a)(1) and (a)(2) delete the phrase, ''or jurisdiction.'' By deleting this language, the Board will not allow licensed accountants from the District of Columbia to apply for temporary licenses. Was this the Board's intent? If so, why?
4. Section 11.9.--Use of professional title solely as mark of achievement by individual without current license.--Consistency with statute; Protection of public welfare; Reasonableness.
The House Committee has expressed concerns that allowing the use of ''CPA'' as a professional title without the need to maintain a current license has the potential to mislead the public. We agree. As an example, Paragraphs (5)(ii) and (iii) state that an individual who is using CPA as a professional title may use ''CPA'' on business cards or letterhead and other stationery respectively. By contrast, Paragraph (5)(i) only allows a person to use CPA as a professional title solely on a resume or curriculum vitae '' . . . when accompanied by language reflecting that the individual's license is inactive.''
Should an individual who only wants to use ''CPA'' as a mark of professional achievement on a business card or letterhead be required to disclose that their license is inactive as is required by Paragraph (5)(i)?
5. Section 11.25.--Contingent fees.--Consistency with other regulations.
The Board states in the Preamble that it used the American Institute of Certified Public Accountants' (AICPA) professional standards as the model for this section of the regulation. We understand that since the Board drafted this regulation, both the Securities and Exchange Commission and PCAOB have expressed concerns with the AICPA's interpretations with regard to the use of contingent fees. Therefore, we recommend the Board reconsider the applicability of AICPA's standards with regard to contingent fees.
6. Section 11.31.--Records.--Clarity.
The first sentence of this section, as found in the Board's submittal of the proposed regulation, was not included in the March 5, 2005 edition of the Pennsylvania Bulletin. This error should be corrected in the final-form publication.
7. Section 11.55.--Experience requirements for CPA certification.--Consistency with statute; Reasonableness; Clarity.
Subsection (a)
This subsection lists the general requirements for candidates seeking to become qualified for the CPA examination. Section 4.1(c) of Act 140 of 1996 (Act) states that individuals sitting for the CPA examination for the first time after January 1, 2000, must complete their CPA experience requirements within 120 months after applying for certification. The Act also states in the same section that individuals who took the CPA exam for the first time before January 1, 2000, do not have to adhere to the time requirements.
For the reasons stated in our first comment, the Board should include the time limitations found in Section 4.1(c) of the Act in the final-form regulation.
Subsection (b)
The Board is deleting ''training sessions on the attest function'' as part of the qualified experience in attest activities that an individual can acquire to satisfy the experience requirement for CPA certification. The Board should clarify that candidates for CPA certification who have participated in ''training sessions on the attest function'' before the effective date of this regulation will be able to count those hours toward part of their required qualified experience.
8. Section 11.56.--Supervisor of experience; verification.--Clarity.
The House Committee has recommended that the Board retain language in Subsection (c) that states, ''A supervisor may not knowingly submit a false or inaccurate statement or willfully refuse to submit a verified statement when qualified experience has been acquired.'' If the Board chooses to make this change in the final-form regulation, a cross-reference should also be included to the applicable penalties that may apply.
JOHN R. MCGINLEY, Jr.,
Chairperson[Pa.B. Doc. No. 05-967. Filed for public inspection May 13, 2005, 9:00 a.m.]
