PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 99-23-056.
Title of Rule: WAC 4-25-631 Compliance with standards.
Purpose: To identify the standards with which the board requires certified public accountants (CPAs) to comply and the bodies that promulgate the identified standards.
Statutory Authority for Adoption: RCW 18.04.055 (2) and (6).
Statute Being Implemented: RCW 18.04.055 (2) and (6).
Summary: The rule requires Washington certified public accountants (CPAs) to comply with rules, regulations, professional standards promulgated by the appropriate bodies for each endeavor undertaken.
Reasons Supporting Proposal: The board's legal counsel and prosecuting attorney general advised the board to clarify the requirements on compliance with standards. The goal of the amendment is to:
| • | Promote clarity. |
| • | Ensure effective communication. |
| • | Ensure fairness in interpretation and application of the rule. |
| • | Promote efficiencies through minimizing gray areas. |
| • | Address the need to protect the public through regulation of the practice of public accountancy and enhancing the reliability of information. |
Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Dana M. McInturff, CPA, 210 East Union, Suite A, Olympia, (360) 586-0163.
Name of Proponent: Board of Accountancy, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Compliance with standards is a rule of professional conduct necessary to establish and maintain high standards of competence and ethics of certified public accountants (CPAs) to protect the public interest.
Proposal Changes the Following Existing Rules: The amendment to the rule:
1. Adds the following to the listing of "appropriate bodies":
a. Cost Accounting Standards Board (CASB).
b. Federal Accounting Standards Advisory Board (FASAB).
c. U.S. General Accounting Office (GAO).
d. Federal Office of Management and Budget (OMB).
2. Eliminates "recognized educational and industry institutions" from the listing of appropriate bodies.
3. Replaces the listing of generic standards with which CPAs must comply with a listing of specific standards.
4. Requires CPAs to follow three criteria for professional services not governed by the specific standards listing.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rule will not have more than minor economic impact on business.
RCW 34.05.328 does not apply to this rule adoption. The Board of Accountancy is not one of the agencies required to submit to the requirements of RCW 34.05.328.
Hearing Location: Wyndham Garden Hotel -- SeaTac, 18118 Pacific Highway South, SeaTac, WA 98188, on April 28, 2000, at 9:30 a.m.
Assistance for Persons with Disabilities: Contact Cheryl Sexton by April 21, 2000, TDD (800) 833-6384, or (360) 664-9194.
Submit Written Comments to: Dana M. McInturff, P.O. Box 9131, Olympia, WA 98507-9131, fax (360) 664-9190, by April 26, 2000.
Date of Intended Adoption: April 28, 2000.
February 25, 2000
Dana M. McInturff, CPA
Executive Director
OTS-3865.1
AMENDATORY SECTION(Amending WSR 98-12-050, filed 5/29/98,
effective 6/29/98)
WAC 4-25-631
((Compliance with standards.)) With which
rules, regulations and professional standards must a CPA comply?
((A certified public accountant shall exercise due care and
professional judgment in order to comply with the pertinent
accounting principles, professional standards, regulations,
releases and rules (hereinafter referred to as "standards")
promulgated by the "appropriate bodies" for each endeavor
undertaken. A certified public accountant shall be knowledgeable
of federal, state and local law pertinent to the endeavor. If
professional standards differ from board rule, board rules
prevail.
Such "appropriate bodies" include, but are not limited to, the Securities and Exchange Commission; the Financial Accounting Standards Board; the Governmental Accounting Standards Board; the Internal Revenue Service; federal, state, and local audit, regulatory and tax agencies; the American Institute of Certified Public Accountants; and recognized educational and industry institutions.
Such "standards" include, but are not limited to:
(1) Regulation SX and the accounting series releases of the Securities and Exchange Commission;
(2) Generally accepted accounting principles and other comprehensive bases of accounting;
(3) Generally accepted auditing, review, compilation, attestation, consulting and peer review standards;
(4) Generally accepted government accounting standards;
(5) Consensus opinions of "appropriate bodies'" such as Emerging Issues Task Forces;
(6) Circular 230 of the IRS and "appropriate bodies'" guidance with respect to responsibilities in tax practice;
(7) Rules governing practice before regulatory agencies; and
(8) Guidance found in industry publications and textbooks and articles published by recognized accounting professionals or societies.)) A CPA must comply with rules, regulations, and professional standards (standards) promulgated by the appropriate bodies for each endeavor undertaken. However, if professional standards differ from board rule, board rules prevail.
Such appropriate bodies include, but are not limited to, the Securities and Exchange Commission (SEC); the Financial Accounting Standards Board (FASB); the Governmental Accounting Standards Board (GASB); the Cost Accounting Standards Board (CASB); the Federal Accounting Standards Advisory Board (FASAB); the U.S. General Accounting Office (GAO); the Federal Office of Management and Budget (OMB); the Internal Revenue Service (IRS); the American Institute of Certified Public Accountants (AICPA), and federal, state, and local audit, regulatory and tax agencies.
Such standards include:
(1) Statements on Auditing Standards and related Auditing Interpretations issued by the AICPA including subsequent amendments;
(2) Statements on Standards for Accounting and Review Services and related Accounting and Review Services Interpretations issued by the AICPA including subsequent amendments;
(3) Statements on Governmental Accounting and Financial Reporting Services issued by GASB including subsequent amendments;
(4) Statements on Standards for Attestation Engagements and related Attestation Engagements Interpretations issued by AICPA including subsequent amendments;
(5) Statements of Financial Accounting Standards, together with those Accounting Research Bulletins and Accounting Principles Board Opinions which are not superseded by action of the FASB, including subsequent amendments;
(6) Statement on Standards for Consulting Services issued by the AICPA including subsequent amendments;
(7) Statements on Quality Control Standards issued by the AICPA including subsequent amendments;
(8) Statements on Responsibilities in Tax Practice and Interpretation of Statements on Responsibilities in Tax Practice issued by the AICPA including subsequent amendments;
(9) Statements on Responsibilities in Personal Financial Planning Practice issued by the AICPA including subsequent amendments;
(10) Professional Code of Conduct issued by the AICPA including interpretations, ethics rulings, and subsequent amendments;
(11) Governmental Auditing Standards issued by the U.S. General Accounting Office, and subsequent amendments; and
(12) Auditing and Accounting Guides (both General and Industry) issued by the AICPA.
If the professional services are governed by standards not included in subsections (1) through (12) of this section, the CPA must:
• Justify the departure from the standards listed in subsections (1) through (12) of this section;
• Determine what standards are applicable; and
• Comply with the applicable standards.
Copies of the above standards may be inspected at the board's office.
[Statutory Authority: RCW 18.04.055(6). 98-12-050, § 4-25-631, filed 5/29/98, effective 6/29/98. Statutory Authority: RCW 18.40.055. 93-22-046, § 4-25-631, filed 10/28/93, effective 11/28/93.]