University of Mississippi eGrove American Institute of Certified Public Accountants Newsletters (AICPA) Historical Collection

2000 CPA letter, 2000 American Institute of Certified Public Accountants

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Recommended Citation American Institute of Certified Public Accountants, "CPA letter, 2000" (2000). Newsletters. 145. https://egrove.olemiss.edu/aicpa_news/145

This Book is brought to you for free and open access by the American Institute of Certified Public Accountants (AICPA) Historical Collection at eGrove. It has been accepted for inclusion in Newsletters by an authorized administrator of eGrove. For more information, please contact [email protected]. . The . site member- member- The CPA Letter's . www.toptentechs.com site site at segment segment supplements and continue to will will be continually updated through­ visit the Top Ten Technologies Web For more information, look to future editions of Systems Budgeting Reporting Competency A 13-minute video, entitled AICPA Top 1. 1. E-Business 2. 2. Controls and Security Information 3. Training and Technology 6. Technology Management and 8. Issues Net 5. 5. High Availability and Resiliency of 7. Electronically-based Financial 9. Office Virtual The 4. 4. Recovery Disaster 10. Privacy Top Issues Technology 10 for2000 and outs of conducting business without 889577CPA01), 889577CPA01), has been prepared contain­ walls wires. or walls Technologies 2000 Highlights (No. (see page 9). out the year with tips useful and information related to the technologies. selected Satisfaction Center (see page 9) or visit ing helpful hints from and some of this recommendations year’s lab participants. It is available free of charge (there is a $7.25 this this conference should contact the Member www.aicpa.org charge for shipping and handling) interested to any AICPA member.Member Contact Satisfaction the Center for a copy news u p ate

“There’s no “There’s other forum like this for the These and other findings the recom­ These were and findings other E-Business in E-Business ranked was the top for spot

E-Business and Security Top Dates, Location for TECH 2000 Conference Revised Technology Lists for 2000 attention to Web-enabled applications, Web-enabled to attention and the services profession’s affecting (T3) (T3) lists for 2000 reflect an focus intensive accounting profession in which CPAs with so many differing opinions can gather and XML, bandwidth and other arenas deliverables. list.” watch “emerging an says Ev Johnson, a partner with Deloitte & spend an inordinate amount oftime working sense that we are on the cutting edge with The highly anticipated Top Ten Technologies Technologies Ten Top anticipated highly The and issues, and security E-Business on mendations of technology-astute members of members technology-astute of mendations various AICPA committees, including the Information Technology committees who meet annually to discuss and rank the technologies, applications, issues—and even top membership,” entire Institute’s the affect will who Conn., vol­ as Wilton, in served Touche unteer facilitator of the T3 Lab. “We all the to demonstrate want and technology with the Understanding customers. and clients our areas that most impact our is services key to 2000. In putting this at the top, participants of world burgeoning the face CPAs more and sity to comprehend cyberspace and the ins indicates indicates that CPAs should turn their reach a consensus on the technologies that our audiences.” of needs the meeting both technology applications and issues for expressed their concern that each day, more The dates and location of the TECH 2000 conference have been revised to May 10-12 in Atlanta. Members interested in attending

the Internet and explore its capabilities for public practice, business and industry, gov­ ernment, and education. As a result, the T3 Lab has drawn to the attention neces­ urgent CPA Letter CPA

Vol. 80 No. 80 1 Vol. The Highlights 10 88 89 and 88 Offers Trap for Tax Tax for Trap Offers “CPA Logo” Accessories Accessories Logo” “CPA Auditing Standards Standards Auditing Service SysTrustsm CPA Committee and Task Task and Committee Wanted Members Force Self-Study Online Online Self-Study 7 It .and Table.. the at You With Starts Tax Extenders Law Law Extenders Tax Practitioners 7 Staff Two Issues SEC 5 Order Form Order 2 4 Nos. SAS Board Issues Arena Assurance Enters DOL Proposes ERISA ERISA Proposes DOL 6 4 Rules on Audits ofAudits on Rules Fewer with Plans Benefit Participants than 100 Accounting Bulletins Accounting Learning Library Library Learning This Summer Coming 9 a Seat Have to Have We A News Report to Members to Report News A January 2000 2000 January

A merican Institute O f C ertified Public A c c o u n ta n ts 2 T2 he C PA L e t t e r • J a n u a r y 2 0 0 0

Send Us Your E-Mail Address knowledge management system to support actions and provides examples with the their operations. accounting treatment for certain common If you have not submitted your e-mail Applications must be received by equity transactions. address to us or have changed it recently, Feb. 14. Questions, comments or sugges­ The alert is included in copies of this send your e-mail address to tions regarding this new application newsletter being mailed to members in [email protected]. Indicate “e-mail process should be directed via e- public accounting. Members in other seg­ address update” in the subject mail to the Committee ments wishing to obtain a copy should header field to help us process the Appointments Team: visit www.aicpa.org/pubs/cpaltr/index.htm submissions more efficiently. Be news (go to January 2000 CPA Letter) or dial sure to include your full name, and, [email protected] 201/938-3787 from a fax machine and key if known, your membership number briefs in document no. 1566. on the e-mail message. Be assured All previously issued Practice Alerts the AICPA will not sell your e-mail AICPA Brings Accounting have been updated for professional litera­ address to outside third parties. Into High School Curricula ture that has been issued subsequent to the In Sept. 1999, the AICPA released its 360° issuance of the original Practice Alert. The Committee and Task Force Degrees of Possibilities School-to-Work updated Practice Alerts can be found on the Members Wanted Curriculum Kit to a pilot group of 2500 AICPA’s SEC Practice Section Web site at www.aicpa.org/members/div/secps/index.htm. As part of the recent committee restructur­ high schools throughout the United States. ing, the process by which members can The kit is a multi-media, multi-disciplinary apply for committee participation has been school-to-work curriculum featuring lesson CPA Letter Supplements enhanced using state-of-the-art technol­ plans, student activities and answer keys Available ogy. Also, the application process has been that focus on educating students about the To obtain any of the member-segment sup­ expanded to encompass task forces that importance of accounting in the business plements (noted in italic) produced this may be formed during the year. world and everyday life activities. month with The CPA Letter. To apply for committee service or to be The kit contains five academic units part of the talent pool for task force partic­ that link the secondary education areas of Dial 201/938-3787 from a fax ipation during the 2000-2001 committee social studies, science, mathematics, busi­ machine and key in document nos.: year, members should: ness education and accounting to “real large firms, 1557; medium firms, 1558; (1) Log on to www.aicpa.org; link to world” scenarios and activities of a CPA. small firms, 1559; business & industry, “Volunteerskills” In addition, the kit includes such career 1560; internal audit, 1561; government, (2) Complete online an assessment of guidance materials as the video, 1562; education, 1563; and Practice Alert your skills using simple point-and- Accounting. The One Degree With 360° 2000-1, 1566 Degrees of Possibilities, and the CD- click technology. This process www.aicpa.org/pubs/cpaltr/index.htm replaces the previous biographical ROM, Room Zoom: The CPA SourceDisc. application form used. For more information, download the (3) If you are applying for committee ser­ Nov. 1999 issue of the Members in vice, indicate the specific Education Supplement of The CPA Letter committee(s) for which you are mak­ at www.aicpa.org/pubs/cpaltr/index.htm. PUBLIC MEETING NOTICES ing an application. Selection for a task For detailed agendas, dial 201/938-3787 Jodi Ryan, [email protected] force will be based on the skills you from a fax machine and key in document entered on your assessment. no. 1206 two weeks prior to these meetings. Contained on the Web site is additional Practice Alert 2000-1 Issued information and instructions on how the Accounting Standards Executive application process works. Note: This and Prior Alerts Updated Committee: Jan. 27-28, New Orleans application process requires access to the Practice Alert 2000-1, Accounting for Auditing Standards Board: Feb. 8-10, Internet and an e-mail account. Certain Equity Transactions, has been New Orleans Additionally, going forward committees issued. This Practice Alert emphasizes the Professional Ethics Executive will be using the AICPA’s Web-based complexity of accounting for equity trans­ Committee: Feb. 14-15, Phoenix

The CPA Leiter (ISSN 0094-792x) January 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, inc. Postmaster: Send address changes to The CPA Leiter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L . Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] January 2000 • T he CPA L etter 3

made, but much remains to be done. years, and they must assure that those who All licensed CPAs, according to the supervise attest engagements and sign revisions, are subject to the authority of reports meet professional competency the state boards of accountancy, regardless requirements. The competency provision of type of employment. CPAs in industry is a new element of statutory public pro­ are the same as CPAs in public practice for tection. purposes of the umbrella coverage of a Thus the legal framework gives explicit state board. This will write into law that regulatory attention to attest work, while we are a single profession of CPAs admitting that CPAs do other work. It’s a no matter where we deliver ser­ sensible distinction that recognizes the c hair's vices and no matter who is our public interest in attest regulation without corner customer. entangling non-attest work when no regu­ In keeping with these concepts, the lation is needed. legal revisions broaden the experi­ The revised laws will reflect the way By Robert K. Elliott, CPA ence requirements for licensure. No longer we treat each other. All AICPA members Chair, AICPA Board of Directors would “public accounting” experience be are covered by our ethics code, and all Our ongoing campaign to update state the sole qualifying background for the CPAs in a state will be covered by state accountancy laws is full of meaning for aspiring CPA. The experience can also be regulation. The AICPA is a resource for the profession and achieving the Vision. It gained in government, industry, or colleges help in delivering all types of services, and will mean a legal framework more suited and universities, and more types of experi­ the legal revisions recognize all types of to the profession we are becoming. The ence are accepted. The candidate can meet work by CPAs as CPA work. framework recognizes the profession’s the experience requirement by performing The changes further the Vision by recog­ unity at long last, but focuses regulation any type of professional service or advice nizing that CPAs perform a broad set of ser­ on attest work, consistent with the devel­ involving the use of accounting, manage­ vices and will be performing a still broader opment of new services under circum­ ment advisory, financial advisory, tax, set in the future, by the experience require­ stances as unfettered as our competitors’. attest, or consulting skills. ments that recognize additional competen­ To understand this, recall that the The requirements for attest services dif­ cies, and by the way they facilitate interna­ AICPA and the National Association of fer from those for other services. tional trade in accountancy services. We State Boards of Accountancy have revised Qualifying experience for those doing will have a better legal base from which to the model accountancy bill they jointly attest work must be attest experience. continue our modernization of the profes­ support, and we have been trying to get the Attest services still must be provided sion and our realization of the Vision. revisions adopted in states across the through licensed CPA firms. The firms [email protected] country. A great deal of progress has been must undergo peer review every three

CPA Vision Impacts Profession and Careers business for his organization. Heim found that approaching clients with a holistic view, looking at their entire organization, as opposed to just With Tempe, Ariz., as its backdrop, the second annual Vision-to- financial or tax issues, has increased their value to clients exponentially. Strategy meeting held in Nov. 1999 brought together representatives from 43 state CPA societies and the AICPA. A forum to share best “I enjoy my work more now,” says Heim, “even though I am fre­ practices and exchange ideas to move the CPA Vision project for­ quently asking, or am being asked, questions that I do not know the ward, the conference revealed the momentum that the answers to. My value now is often based on helping my Vision has created within the state societies as well as clients consider new ideas that were previously ignored, its impact on individual CPA’s careers. cpa vision versus knowing the answer to everything.” The new economy is changing the rules of business, A recent strategic planning retreat has helped Heim’s and CPAs are beginning to truly embrace the transition. process firm create a vision for their future and began a thor­ CPAs in public and private practice, as well as sole pro­ ough reevaluation of current services and fee structures. prietors, have found that the CPA Vision has given them the permis­ New Times, New Rules sion to find non-traditional ways to provide value to their clients. Lynne Lehr-Buck, CPA, believes helping people is what business Providing higher level services is where the rewards—in terms of is all about. After serving as a CPA in both public practice and self-fulfillment and economics—are most apparent. industry, she was disenchanted from too many tax seasons and the Smarter Service seemingly narrow scope of the profession. Ready to enter another For F. Carter Heim, CPA, founder of Annapolis-based Heim & field, Lehr-Buck began working with the CPA Vision Future Associates, the CPA Vision has been a catalyst for change at every Forums in 1997 and saw a light at the end of the tunnel. “It was level of his business. As his awareness of the profession’s trends electrifying to see CPAs who were working to make sure our pro­ increased, so did his ability to map new strategies and new lines of fession survives in the next century,” she says. continued on page 6 4 The CPA L e t t e r • Ja n u a r y 2000

Second Set of Questions and Answers on insurer’s financial statements. Additionally, listed in Section 178.6(a) of the New York Software Revenue Recognition Released all material deficiencies in internal control State Insurance Department’s Regulations The AICPA staff, helped by industry are to be reported, even if the deficiencies to the extent that these go beyond the crite­ experts, released a second set of technical do not constitute a reportable condition ria in COSO. questions and answers on financial account­ under Statement on Auditing Standards No. The AICPA will post additional infor­ ing and reporting issues related to 60, Communication of Internal Control mation or, if necessary, additional guidance Statement of Position 97-2, Software Related Matters Noted in an Audit. relating to this matter on its Web site Revenue Recognition. For the convenience Although the law does not prescribe the (www.aicpa.org). of interested parties, the second set of form and content of the report, the AICPA’s Audit Issues Task Force has discussed the Auditing Standards Board Issues SAS Qs&As are included with previously Nos. 88 and 89 released Qs&As. The staff may continue to requirements of the insurance law as they In Dec. 1999, the Auditing issue Qs&As on software revenue as issues relate to the assessment of Standards Board issued arise. Qs&As will be housed in the AICPA internal controls over derivative accounting Statement on Auditing publication titled Technical Practice Aids, transactions. The AITF has ten­ Standards No. 88, Service copies of which are available through the tatively concluded that the & auditing Organizations and Reporting Member Satisfaction Center (see page 9). required assessment of internal news on Consistency (No. In addition, the Qs&As have been placed in controls over derivatives and 060690CPA01). The SAS amends SAS No. the accounting standards section of the the report of weaknesses in those internal 70, Reports on the Processing of AICPA Web site (www.aicpa.org/mem- controls are beyond the scope of the internal Transactions by Service Organizations, to bers/div/acctstd/general/othitem.htm). control work performed in connection with help auditors determine what additional Questions may be e-mailed to Dan Noll a financial statement audit. A separate information they might need when auditing ([email protected]). examination engagement performed in accordance with Statement on Standards for the financial statements of an entity that Important Change to New York Attestation Engagements No. 2, Reporting uses a service organization to process trans­ Insurance Law on an Entity’s Internal Control Over actions. The second part of the SAS Insurers operating in New York State are Financial Reporting, (AICPA, Professional amends AU Section 420, “Consistency of now authorized to enter into derivative Standards, vol. 1 AT sec. 400) is necessary. Application of Generally Accepted transactions for hedging purposes and for The basis for the above-mentioned Accounting Principles,” to clarify which income generation purposes. The amend­ SSAE No. 2 engagement is management’s changes in a reporting entity warrant a con­ ments establishing this authority went into assertion regarding the effectiveness of its sistency explanatory paragraph in the audi­ effect on July 1, 1999. They apply to internal controls over derivatives. An tor’s report. The SAS was effective upon domestic life, property/casualty, reciprocal, insurer’s management can evaluate the issuance. mortgage guaranty, cooperative effectiveness of the entity’s internal control The ASB also has issued SAS No. 89, property/casualty and financial guaranty using the criteria established by the Audit Adjustments (No. 060691CPA01), insurers. Committee of Sponsoring Organizations of which, among other things, requires an audi­ Under the new law, insurers who enter the Treadway Commission. Its publication, tor to inform an entity’s audit committee into derivative transactions must file with Internal Control Issues in Derivatives about misstatements aggregated by the audi­ the insurance department a statement Usage: An Information Tool for tor that management does not correct describing the independent CPA’s assess­ Considering the COSO Internal Control— because it believes they are immaterial to the ment of the internal controls over derivative Integrated Framework in D erivatives financial statements taken as a whole. SAS transactions. This assessment is considered Applications, was developed to help end- No. 89 is effective for audits of financial part of the evaluation of internal controls users of derivatives products establish and statements for periods beginning on or after prescribed by section 307(b) of the New assess internal controls over derivatives Dec. 15, 1999. Early adoption permitted. York Insurance Law. It is required to be using the COSO framework. In addition to To obtain copies of the SASs, contact made regardless of whether the derivative the criteria in the mentioned publication, Member Satisfaction (see page 9; price transactions are material in relation to the practitioners should consider the criteria each: $11.50 member, $14 non-member).

CPA SysTrustsm Service Enters Assurance Arena CPA SysTrustsm, a new assurance service developed effectiveness to enable the system to function reli­ jointly by the AICPA and the Canadian Institute of ably. A system must satisfy all of the SysTrust crite­ Chartered Accountants, will enable members to pro­ assurance ria to be deemed reliable. For more information on vide assurance on a system’s reliability. The service this new service opportunity, see this month’s CPA was developed under the attestation standards in services Letter public accounting supplements (see page 2 for which the CPA performs procedures to determine access instructions) or e-mail Erin Mackler at whether the controls over a system are operating with sufficient [email protected]. CPA Accessories Collection

Item # Price Item # Price 73157 $30.80 Lee Crossgrain Heavyweight 6100 $13.15 Crewneck Sweatshirt 95% Cotton Pierre Cardin Pen 11oz. Material, Sizes: S, M, L, XL Lacquer Finish With Gold Trim

Item # Price Item # Price 5180 $11.30 Hanes Beefy Tee 100% Cotton 395 $8.50 Sizes: S, M, L, XL Mouse Pad Back Shown; Logo On Front 10”x11” Non-Skid Surface

Item # Price Item # Price 6374 $13.75 6 Panel Washed Brushed 5011 $29.70 Cotton Oxford Cap Stone/Black Outerbanks 100% Cotton Embroidered Pique Knit 2” Droptail Embroidered, Sizes: S, M, L, XL

Item # Price Item # Price CC12 $8.45 11oz. Ceramic Coffee Mug 2830 $.90 2” Button

Item # Price Item # Price LP1-P (Post Back) $2.80 TXL $22.50/doz. LP1-S (Safety Back) $2.80 Spalding®Top-Flite® XL® 1/2” Lapel Pin Golf Balls Die-Cast Metal

CPA Order Form Big Game Outfitters Item Description Item Number/Size Quantity Total Price 776 Bay Road Hamilton, MA 01982 Tel. (978) 468-9759 Fax (978) 468-9758 E-mail: [email protected] (inquiries only) Ship To: Name Firm or Organization Street Address* Total Amount City State Zip *Shipping Charges Phone Paid By: **5% MA only Sales Tax *No P.O. Box, please. (not on food or clothes) □ Check □ Money Order Grand Total Shipping & Handling Charges These charges are in addition to the final sale price of the ordered items. □ MasterCard □ Visa

Order Amount S&H Charges Order Amount S&H Charges charge card number

Up to $5.00 $3.67 $60.01-$80 $9.75 exp. date * Shipping charges order amount $5.01-$20 $4.75 $80.01-$100 $10.75 Please Complete: ** Sales Tax: Only on nonclothing/ AICPA Membership Number $20.01-$40 $5.75 $100.01- $250 $15.75 non-food items with MA as the $40.01-$60 $7.75 Over $250 7% of order delivery destination Make check payable to Big Allow 4 weeks for delivery Overseas please add $10 UPS Ground Trac Delivery Signature Game Outfitters 6 6 The CPA Letter • January 2000

CPA Volunteers for Tax Season Colorado, Colorado CPA Society, Section 536 of H.R. 1180, the tax exten­ 303/773-2877; [email protected] ders bill, disallows most installment sales Needed Detroit, Accounting Aid Society, by accrual-method taxpayers. The provi­ Across the country, thousands of 313/647-9620 sion is effective for sales on or after Dec. active and retired CPAs from all seg­ Illinois, Center for Law and Human 17, 1999, the date President Clinton ments of the profession—public, Services, 312/341-1666; signed the bill into law. Without install­ industry, government, not-for-profit, [email protected] ment reporting, there will be immediate and education—make the time to Minnesota, Minnesota Accounting recognition of gain and tax liability, with help low-income people with their tax Aid Society, 612/288-9476; deferred receipt of cash with which to pay returns. They do this during tax season and [email protected] the tax. The tax liability could exceed the service is free. Many of the volunteers New York City, Community Tax Aid, cash generated from the sale by several have tax experience but others are full-time 718/445-3271*; [email protected] times in the first year, severely distressing auditors or accountants. San Francisco, Tax Aid, Inc., the business and its owners and resulting Listed below are the tax clinic programs 415/281-1600; [email protected]­ in a claim against the practitioner. To led by tax professionals. They are looking randersen.com receive more information from the Tax for CPA volunteers for this tax season. Tulsa, Okla., Community Action Division, access the AICPA Fax Hotline Each is nonprofit and operates indepen­ Project, 918/382-3200; [email protected] (dial 201/938-3787 from a fax machine dently; some offer training programs that Washington, D.C., Community Tax Aid, and request document no. 933). It is also qualify for CPE credit. A surprising number Inc., 703/318-2122; [email protected] available on the AICPA Web site at of low-income tax returns can be complex W. Hartford, Conn., Community www.aicpa.org/members/div/tax/index.htm. and need a professional’s advice. The vol­ Accounting Aid and Services, Also included in H.R. 1180 is relief for unteer work is without risk of preparer 860/570-9113 individuals from the alternative minimum penalty since the definition of “preparer” *This phone number may be given to tax. H.R. 1180 allows individual taxpayers requires compensation. the public only after permission from the to claim certain tax credits, such as the Accounting and consulting services may organization. child care credit, against the AMT. A simi­ also be offered. (For the non-tax programs lar provision was effective for 1998. The in other areas of the country, contact Tax Extenders Law Offers Trap AICPA supports repeal of the AMT and has Accountants for the Public Interest at told Congress that, at a minimum, it needs 410/837-6533.) for Tax Practitioners to allow such credits as those in H.R. 1180. Baltimore, Maryland Volunteer Lawyers The AICPA has identified a trap for tax H.R. 1180 also changes the estimated tax Service, 410/547-6537; [email protected] practitioners who are advising accrual- safe harbor for those with adjusted gross Boston, Community Tax Aid of Boston, method clients on the installment sale of income over $150,000 to 108.6% of the 617/572-7983; [email protected] business assets or an entire business. prior year’s taxes. continued from page 3 — CPA Vision Process neys who work full-time in employee benefits and four new divi­ Lehr-Buck decided that starting her own practice was the way to sions: business valuation, management information systems, per­ go. She threw away all the old rules when she began Denver, Colo.- sonal financial planning and health care practice management. based IntraScope Accounting Solutions and used her own values to “By offering both client- and market-driven services, we are guide her client-serving abilities. Lehr-Buck makes time investments meeting both the immediate and future needs of our clients,” says in her clients. Those investments help her better understand her Williamson. “We’ve cut out services that aren’t cost effective and client’s business and gauge where she can provide additional ser­ freed our resources to focus on a higher level of value-added ser­ vices. Partnering with clients and helping them achieve their busi­ vices that our clients need and want.” ness goals is where Lehr-Buck finds her rewards. More IS More Member Satisfaction Center Jimmy Williamson, CPA, understands that change can be prof­ • Address/membership information itable. As chair of the board of directors for North Alabama-based • Orders and inquiries McGriff, Dowdy & Associates, and a member of the National CPA • Subscriptions Vision Team, Williamson saw the transformation of the profession • Conference registrations approaching. With his help, the firm’s partners began challenging • Network licenses the way they have always done business and expanding into non- traditional services. 888/777-7077 [email protected] This “out-of-the-box” thinking resulted in hiring a marketing director to help both their firm and their clients with marketing and Voice Mail Box comments, communications and a human resource specialist to assist clients 888/999-9252 with employment law issues. It also meant the addition of two attor­ J a n u a r y 2000 • T h e CPA L e t t e r7

Exposure Drafts Now Published Exclusively on Web Site AICPA standard-setting committees are will be mailed to addressees on our expo­ for all AICPA exposure drafts, send your now publishing exposure drafts of pro­ sure draft mailing list. Included in the noti­ e-mail address to [email protected]. posed professional standards exclusively fication are instructions on how to locate Indicate “exposure draft e-mail list” in the on the AICPA Web site. This change the exposure draft on the Web site. subject header field to help us process the speeds delivery of the proposals to mem­ Beginning May 1, 2000, the AICPA will submissions more efficiently. Be sure to bers and is a part of the AICPA’s Web First notify interested parties about new expo­ include in the message your full name, initiative. Through Apr. 30, 2000, notifica­ sure drafts only by e-mail. To have your e- mailing address and, if known, your mem­ tion of issuance of new exposure drafts mail address put on the list for notification bership and subscriber number.

GAO Issues Revised Standards for Internal Control address. SAB 101 also spells out the basic criteria that must be met before registrants can record revenue. Those criteria reflect The General Accounting Office has issued its revised “Standards the recurring revenue recognition themes found in the existing for Internal Control in the Federal Government,” (GAO/AIMD- accounting rules. Copies of both bulletins are available on the 00-21.3.1). This publication updates and replaces the previous SEC’s Web site—www.sec.gov/rules/acctreps/sab100.htm and standards first issued in 1983 in accordance with the Federal www.sec.gov/rules/acctreps/sab101.htm. Managers’ Financial Integrity Act of 1982. The new standards are effective for fiscal year 2000 and apply to reports required by FMFIA for that year. AICPA Comments on Proposed SEC Rulemaking The standards update was performed primarily in response to: on Audit Committee Disclosures (1) the effect upon internal control as a result of rapid advances in The AICPA recently issued a comment letter on a proposed SEC information technology management, (2) a greater rulemaking on audit committee disclosures (The CPA recognition of the role of human capital management Letter, Dec. 1999). In the letter, the Institute reiterated as an important factor in internal control, and (3) the , its previous support of the formation and effective use need to implement updates of the standards used in regulatory of audit committees. In addition, the AICPA stated that the private sector where useful in the federal govern­ while it agrees with the commission’s proposed ment environment. The new standards also reflect the matters requirement for reviews of interim financial statements increased emphasis on internal control inherent in for all public companies regardless of size, the Institute believes important legislation, such as the Chief Financial Officers Act of that reviews should not be required to be completed prior to earn­ 1990, the Government Performance and Results Act of 1993, and the Federal Financial Management Improvement Act of 1996. ings releases nor should the independent auditor’s review report be These standards provide the overall framework for federal agen­ required to be filed. The letter, which commented on audit commit­ cies to establish and maintain internal control and to identify and tee charters and safe harbors as well, also cautions that creating bur­ address major performance and management challenges and areas densome reporting and performance measures or increasing the at greatest risk for fraud, waste, abuse and mismanagement. possibility of future legal liability may hinder the company’s ability Copies of the standards are being widely distributed through­ to attract and retain high-quality audit committee members. For the out the federal government. Individuals may obtain copies from complete text of the letter, visit www.aicpa.org. GAO Distribution at Room 1100, 700 4th Street, NW, Washington, DC 20548, or by calling 202/512-6000. The stan­ DOL Proposes ERISA Rules on Audits of Benefit dards are also available on the Internet at www.gao.gov under the Plans with Fewer than 100 Participants link to “Special Publications.” The Department of Labor on Nov. 30, 1999, proposed rules that would add requirements for remaining within the scope of a cur­ SEC Issues Two Staff Accounting Bulletins rent exemption for small plans (fewer than 100 participants) under The Securities and Exchange Commission has issued Staff ERISA. Under these proposed rules, small employee benefit plans Accounting Bulletin Nos. 100 and 101. SAB No. 100 provides would not be required to have an annual audit of their financial guidance on the accounting for and disclosure of certain expenses statements if they hold at least 95% of their assets within certain and liabilities commonly reported in connection with restructuring certified financial institutions or fulfill more stringent bonding activities and business combinations, and the recognition and dis­ requirements when less than 95% of assets are in such institu­ closure of asset impairment charges. SAB No. 101 provides guid­ tions. Comments on the rule proposal are due to the DOL Feb. 1. ance on the recognition, presentation and disclosure of revenue in For more information, contact John Keene, Office of Regulations financial statements filed with the SEC; it does not change exist­ and Interpretations, Pension and Welfare Benefits Administration, ing rules on revenue recognition. Rather it draws upon the exist­ at 202/219-8521. You can also access the Federal Register notice ing rules and explains how the staff applies those, by analogy, to of the proposed rule on the DOL’s Web site at other transactions that the existing rules do not specifically www.dol.gov/dol/pwba/public/regs/fedreg/proposed/main.htm. 8 T h e CPA Letter • January 2000

Call for Professor/Practitioner Cases The AICPA is now accepting proposals for tion technology with financial decision business perspective (relating to under­ cases under the 2000 Professor/Practitioner making and new management techniques; standing of internal and external business Case Development Program. This program deal with the global marketplace and inter­ contexts). Cases should take an integrative is designed to promote collaboration of national issues; and address ethics and/or approach that recognizes related issues that accounting educators and practitioners (not fraudulent financial reporting and strategies may cross over traditional accounting exclusive to public accounting) in the for preventing and detecting fraud. Cases course or disciplinary boundaries. Case development of real-world-based cases for should address the competencies identified proposals are due Mar. 31. For information use in the accounting classroom. Of partic­ in the AICPA Core Competency Framework and application: ular interest are cases that: address issues or for Entry Into the Accounting Profession. services identified in the CPA Vision; relate These competencies are categorized as www.aicpa.org to the new assurance services that illustrate functional (technical competencies most [email protected] how the accountant or auditor can add closely aligned with the value contributed value for an employer or client; deal with by accounting professionals), personal Leticia Romeo, 212/596-6221 financial management, blending informa­ (individual attributes and values) and broad Call for Nominations for AICPA Distinguished Achievement in Accounting Education Award AICPA members are invited to nominate an past five years) accounting educator having a Nominations are due Feb. 1. For a accounting educator for the 2000 AICPA teaching career of at least 20 years; distin­ nomination form and more information on Distinguished Achievement in Accounting guished for excellence in classroom teaching the award: Education Award. This award is designed to and motivating students; contributing to the www.aicpa.org/members/div/career/ recognize full-time college accounting educa­ accounting profession, as demonstrated by edu/laaea.htm tors distinguished for excellence in teaching active involvement in professional activities [email protected] and for national prominence in the account­ such as leadership in national professional ing profession. The nominee must be: a cur­ accounting organizations; and exemplify the Leticia Romeo, 212/596-6221 rent full-time or recently retired (within the philosophy of the CPA Vision.

Under the automatic disciplinary provisions of the Institute’s AICPA Peer Review Board. Hearing panels deemed that these bylaws, the following members have had their memberships: firms did not complete the corrective or monitoring actions —Suspended: required as a condition of acceptance of the firms’ • F. Ralph Dowdy of Huntsville, Ala., effective Oct. 14, most recent peer reviews: Neil R. Thompson, CPA, 1999, following the denial by an ad hoc committee of disciplinary Carbondale, Ill.; Spinner and Spinner, Bound Brook, the Joint Trial Board that the automatic disciplinary N.J.; Richard A. Podraza SC, Milwaukee; and Frank action not apply to his circumstance, in connection actionsj A. Dugovich, CPA, Sandusky, Ohio. with his conviction of perjury in the first degree. Effective Oct. 26, 1999, the following firms were ter­ — Terminated: minated from the AICPA peer review program for failure to coop­ • James M. Gleason of Wilsonville, Ore., effective Nov. 3 , 1999, fol­ erate with the AICPA Peer Review Board. Hearing panels deemed lowing the denial by an ad hoc committee of the Joint Trial Board that these firms did not submit a copy of the report, letter of com­ that the automatic disciplinary action not apply to his circumstance, ments and letter of response on the firms’ most recent peer in connection with his actions involving insider trading practices. reviews: Allen L. Bray, CPA, Riverside, Calif.; Teri L. Klaehn, Firms Terminated from Peer Review Program CPA, Adams, Minn.; Pradeep Sulhan PC, Houston, Tex.; Joe P. Effective Oct. 26, 1999, the following firms were terminated from Hess, CPA, Wills Point, Tex.; and Patricia A. Catagnus, CPA, the AICPA peer review program for failure to cooperate with the Richardson, Tex.

AICPA Vehicle Insurance Plan Lowers Rates National General Insurance Company, a GMAC Insurance Company rated A+ (“Superior”) by A.M. Best, is the underwriter The AICPA Vehicle Insurance Plan, which provides exclusive benefits for AICPA members, has cut its rates in 27 states. for the Institute’s vehicle insurance plan. National General also Benefits of the plan include locksmith service if you are locked ranks in the top 10 insurance companies in the nation for customer out of the car, money toward lodging and meals if you are in an service, according to a leading consumer reporting magazine. accident away from home and a theft reward for the recovery of Call for a free, no-obligation, money-saving quote at your vehicle if stolen. 800/847-2886, ext. 9629. Ask for the special AICPA rate. January 2000 • T he CPA L etter9

Fifth Edition— U.S. Tax Aspects of Doing $82.95 member; $102.95 non-member. information on the most comprehensive

Business Abroad (No. 061068CPA01) governmental accounting rule ever devel­ offers the up-to-date practical and compre­ Successful Technology Consulting: The oped—the Governmental Accounting hensive information needed to understand Boomer Advantage (No. 093014CPA01). Standards Board Statement No. 34. This the intricate federal income tax laws for for­ Written for CPAs, this easy-to-use guide is new book provides a summary of the sig­ eign business and investment. The scope of complete with the tools—forms, letters, nificant portions of the statement, answer­ the study focuses on taxation of foreign agreements, plan templates— ing the most important ques­ income earned directly and indirectly by needed to run a profitable tech­ tions about new requirements

U.S. taxpayers (corporations, individuals— nology consulting practice. now for the annual financial citizens and resident aliens—and trusts and Learn how to develop a technol­ a v a i l a b l e reports of state and local estates). Updated for the most recent tax law ogy consulting practice, how to governments starting in changes, administrative pronouncements and structure the engagement, how 2001. Price: $24.95 member; court decisions, this book includes recent to market and sell technology consulting $31.25 non-member. developments in tax treaties, Section 367 services, and how to price engagements rules, foreign currency rules and Subpart F. through models and proven strategies. Visit www.aicpa.org to take advantage of Price: $72 member; $90 non-member. Also included is a checklist for gathering special limited-time discount offers on client data. The book is accompanied by a popular publications, such as select Audit Newly Updated—Accounting Trends & disk that includes a variety of customiz­ & Accounting Guides. Techniques 1999 (No. 009891CPA01) able forms, including employment con­ contains significant accounting presenta­ tracts, detailed program of work and To order, write: AICPA Member tions, discussions and trends — many of examples of employment letters. Price: Satisfaction Team, CPA01, P.O. Box them illustrated with excerpts and tables. $39.95 member, $49.95 non-member. 2209, Jersey City, NJ 07303-2209; Learn the most current terminology and fax, 800/362-5066; call 888/777-7077 explanatory language used in auditors’ Understanding and Implementing (8:30 a.m. to 7:00 p.m., ET); or e-mail reports. The reporting methods in this GASB’s New Financial Reporting Model [email protected]. Prices do not publication are based on a cumulative sur­ (No. 022515CPA01) is a question-and- include shipping and handling. vey and are employed by 600 industrial answer guide for preparers and auditors of Have membership number ready. and merchandising corporations. Price: local government financial statements. Get

We Have to Have a Seat at the Table...and It Starts With You With 10 months left until the elections, it is important for each CPA to realize the impact that he or she has in assuring that pro-business, pro-accounting candidates are elected to Congress. You can do two things on your own to help determine the outcome of the next election. One is to go to the polls and vote. The other is to make a contribution to the AICPA Effective Legislation Committee, the profes­ sion’s political action committee. The AICPA ELC raises funds from individual CPAs and then makes contribu­ tions for candidates to help them fund their campaigns and get their pro-business messages out to the public. Collectively, the CPA profession has the potential to be one of the strongest voices in our nation’s capital. This cannot be done without your support of the profession’s political program. You can make In Aug. 1999, the profession held a difference by simply filling out the attached coupon and mailing your personal check to the AICPA. a fundraising event for Congress­ Take this opportunity to get off the sidelines and into the game by joining the thousands of your fellow woman Sue Myrick (R-N.C.) CPAs involved with the American political system. exclusive to CPAs. Stanley Vaughan, CPA, speaks with Enclosed is my personal contribution to the AICPA ELC for Myrick about her campaign and □ the critically important upcoming $50 □ $100 □ $200 □ $500 □ $1,000 □ Other congressional elections. Name:______Phone No.: ______

Address:

Employer: Occupation:

Mail to: Kelly Rote, ELC Manager 1455 Pennsylvania Avenue, NW, #400, Washington, DC 20004-1081

Contributions to the AICPA ELC are for political purposes. All contributions are voluntary. You may refuse to con­ tribute without reprisal. Contributions are not tax deductible for federal income tax purposes. 1 0 T h e CPA Letter • January 2000

The Center for Investment Advisory Services continues negotia­ Series 65 - Uniform Investment Adviser Law Exam tions with selected leading vendors to aid you in your quest to Series 66 - Uniform Combined State Law Exam become an investment adviser and build a profitable investment Series 63 - Uniform Securities Agent State Law Exam advisory practice. This new member benefit takes you step by step Series 7 - General Securities Representative Exam through the process of getting licensed, getting started and main­ Series 6 - Investment Company Products/Variable Contracts taining profitability. With this goal in mind, we have developed Representative Exam associations with leading vendors that specialize in investment National Regulatory Services. NRS is devoted to providing advisory products. By building strong relationships with these orga­ registration and compliance-related services to firms and individu­ nizations, we have the ability to offer you their goods at special als who want to start a fee-based investment advisory practice. member discounts. They will assist you in the actual investment adviser registration We recognize that members are at different stages of this line process, including preparation and filing of Form ADV, state of business, ranging from some who are just beginning to others applications and supporting documents with the SEC. You will also receive guidance in complying with advertising, record keep­ who have an already-developed clientele. Wherever you are along ing, compensation and capital requirements. the curve, the Center is developing the tools and services neces­ sary for you to deliver value effectively to your clients. www.aicpa.org OR http://investmentadvisory.aicpa.org The Center encourages CPAs to become Registered Investment Advisers and provides the tools and training needed to achieve that 877/66-AICPA status. Previous CPA Letters have described our earliest building blocks for your investment advisory practice, including training Self-Study Online Learning Library Coming This Summer materials, asset allocation software, and investment research and To provide a timely, convenient resource that will help members improve analysis software. Now, additional resources have been added. their careers, business or practice — while fulfilling CPE requirements Securities Training Corporation. For over 25 years, STC has — the AICPA is creating an online learning library. The library will con­ helped over 450,000 individuals successfully prepare for examina­ sist of one- and two-hour modules, totaling 1,200 hours of training and tions in the securities and financial industries. STC offers a broad resources. Members will pay just $95 for total access of all the library's range of learning programs in self-study, video and computer-based products. Watch for this new learning vehicle coming this summer.

formats. Training is available for the following exams:

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Postage Paid at at Paid Postage Periodicals Periodicals ) ) in early www.aicpa.org 877/66-AICPA http ://investmentadvisory.aicpa.orghttp A representative sample of letters pre­ Other partners in the Center include FIIBG will offer participating CPAs pre­ letters on the proposals. senting these views will be posted to the Mar., along with any other representative service. Another said that public members adding credibility to the Professional Ethics lators and demonstrating a commitment to AICPA should first decide voluntary whether it membershipis a organization or a AICPA Web site ( would be closer to the marketplace would they contribute a greatdard deal to setting the stan­ and enforcementExecutive Committeeprocess, in dealing with regu­ being responsive to the nity. Ofbusiness those against, one commu­ member said the quasi-govemmental body. feedback, insight and perspectives would bring added value because committees Standard & Poor’s, MService, Investment Management orningstar Consultants and Ibbotson, as well as National Regulatory Association Corporation. and Securities Training services, and a start-up guide. agement, trading and reporting products, and access to a provider financialof Web sites services for developmentthe community), services, operations business and client tinuing support to CPAs in that role.” ferred pricing forincluding a variety custody oftechnology and services,clearing services, servicesAdvisorCHANNELR suite of portfolio (i.e., man­ access to the ment adviser, and the Center provides con­

(The CPA Dec. 1999). At press time, five let­ One letter in favor said that non-CPA Members were invited to express their “Investment advising moves the CPA to a This alliance is a key component of the serve on senior and permanent committees were in favor and two against ofthe proposedthe change letters to Bylaw werewhich3.2.5 would permit public membersand boards. A to summary of the letters’ pointsmain follows. 31, call 888/637-3277 to obtain a new ters had been received. Three of the letters views on the proposed changes around Mar. 15. Members’due 60 daysvotes from will the mailingbedo not date. receive If theyou ballot material by Mar. package. Letter, Ballot Material to Be Mailed in March; AICPA Bylaws and Code Conduct of Professional will be mailed to all members Ballots on the proposed amendments to the standards as they take on the role of invest­ Correspondence Received on Proposals Fidelity Forms Alliance with InvestmentCenter forAdvisory Services financial planning,” said AICPA President & CEO Barry Melancon. “The Center’s lish and grow an investment advisory practice. advisory an investment and grow lish higher service platform, in the context of resources prepare CPAs to maintain high investment investment advisory martketplace. As a result of the arrangement with FIIBG, members will have access to custody and clearing services, Center, the AICPA’s major initiative to help members compete and succeed in the evolving resources and the support necessary to estab­ will be the preferred provider ofclearing and Through Investment the Advisory Institute’sInvestments Services, Institutional Brokerage Fidelity Center Group forcustody services, further helping members to expand their personalpractices by providing financial investment services to planningclients.

is a Vol. 80 No. 80 2 Vol.

CPA CPA Letter lished in Apr. in lished and Mar. The newslet­ The Mar. and the months of Feb. ter ter will next be pub­ combined issue for This This The The LetterCPA ship, Survey Shows Continues to Earn High Ratings from Member­ 8 Statements SECAdopts New Rules, 7 Center for Excellence in Financial Management Researches Best Practices in Performance Measurement 5 Amendments on Reviewing Financial AICPA Establishes Expert Panels Addressto Business Reporting Issues SAS No. 90 Auditon Committee Highlights 3 Communications Issued Schedule for Spring 4 Announced 2 PrintAdvertisingTV, February/March 2000 A Report News to Members

A merican Institute O f C ertified Public A c c o u n t a n t s 2 The CPA L etter • F ebru ary /M arch 2000

SEC Chief Accountant Writes to Flexible Life Insurance Plan-Spouses, ances simplicity and sovereignty, recog­ Group Variable Universal Life Insurance nizing that these factors are often mutually AICPA About Quality Financial Plan, Group Insurance Plan, Long Term exclusive. Its recommendations flow from Reporting Care Plan and Long Term Disability an ultimate conclusion that it will not be The Chief Accountant of the Securities Income Plan— will participate in the possible to impose a successful federal and Exchange Commission refund distribution. Refund checks Internet tax policy in the absence of signif­ recently wrote to the AICPA to pro­ are scheduled to be mailed in mid- icant efforts by the states to harmonize vide insights on some of the mat­ Feb. their varying sales and use tax regimes. ters on which the Office of the A full copy of the report is available at Chief Accountant has been focus­ newsbriefsTV, Print Advertising www.aicpa.org/letters/acecp.htm . For more information on the ACEC, visit their ing. The letter is part of an ongoing Schedule for Spring dialog between the Chief Web site at www.ecommercecommis­ Accountant and the profession about Announced sion.org. financial reporting and auditing. Financial Television and print advertisements for the management, independent auditors and Institute’s national image-enhancement CPA Leiter Supplements audit committee members of public com­ campaign continue to run. At press time, the Available panies should find the information helpful television schedule for spring was as fol­ in connection with the annual financial lows: CBS Sunday Morning News (Feb. To obtain any of the member-segment sup­ reporting process and are encouraged to 20, Mar. 5, Mar. 19, Apr. 2, and Apr. 16); plements (noted in italic) produced this read the letter, available at www.aicpa.org/ and CNN (12 times per week starting month with The CPA Letter. members/div/auditstd/secchief.htm. Monday, Mar. 6 and ending Saturday, Apr. Dial 201/938-3787 from a fax 15). machine and key in document nos.: Conference on Divorce Returns Print ads will appear in Newsweek large firms , 1550; medium firms, 1551; (Feb. 7, Mar. 6, Apr. 3, and May 1); U.S. small firms, 1552; bu sin ess & in du stry, The 2000 AICPA National Advanced News & World Report (Feb. 7, Feb. 21, 1553; internal audit, 1554; government, Divorce Conference, back by popular Mar. 6, Mar. 20, and Apr. 3); Forbes (Feb. 1555; and education, 1556 demand, will be held May 22-23 at 7, Mar. 20, Apr. 17, May 15, and June 12); Caesars Palace, Las Vegas. This confer­ www.aicpa.org/pubs/cpaltr/index.htm Fortune (Feb. 21, Mar. 6, and Apr. 3); ence is tailored to fit the needs of CPAs or Business Week (Feb. 14, Mar. 13, Apr. 10, attorneys who specialize or are interested and Apr. 24); and Your Company/Fortune in pursuing a practice in divorce, family Small Business (Apr. and May/June). law and related business valuation. Attendees will hear top-notch presenta­ Louise De Sina, [email protected] tions highlighted by real-life examples PUBLIC MEETING NOTICES from the experts. Recommended CPE For detailed agendas, dial 201/938-3787 credit: up to 17 hours. For more informa­ AICPA Submits Comments to from a fax machine and key in document no. tion or to register, visit www.aicpa.org/ the Advisory Commission on 1206 two weeks prior to these meetings. conferences or call 888/777-7077 and mention brochure code G50003CPA02. Electronic Commerce Accounting & Review Services The Advisory Commission on Electronic Committee: Apr. 27-28, New York; July AICPA Insurance Trust to Issue Commerce was established by the Internet 20-21, San Francisco; Aug. 17-18, Boston Tax Freedom Act in Oct. 1998. Chaired by Accounting Standards Executive Record Refund This Month Virginia governor Jim Gilmore, the com­ Committee: Mar. 7 -8 , New York; Apr. The AICPA Insurance Trust and its Life mission is charged with addressing the 25-26, New York Insurance/Disability Plans Committee issues related to Internet taxation and mak­ Auditing Standards Board: Apr. 5 -6 , recently announced that the Trust’s 2000 ing policy recommendations to Congress. New York Annual Refund is expected to exceed the Recently, the AICPA submitted a report $100 million mark for the first time in its to the ACEC calling for radical simplifica­ Other Meetings 52-year history. All Plans— CPA Flexible tion to the current sales and use tax sys­ Peer Review Board: M ay 1 -2 , Life Insurance Plan-Members, CPA tem. The report, to the extent possible, bal­ Washington, D.C.

The CPA Letter (ISSN 0094-792x) February/March 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mail­ ing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L . Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] February/March 2000 • The CPA L e t t e r 3

Two Exposure Drafts Issued on The exposure draft Financial Statements for interim periods ending on or after Mar. Included in Written Business Valuations 15, 2000. Earlier application is permitted. Accounting and Review Services proposes to exempt historical financial SAS No. 90 is available at The Accounting and Review Services statements and normalized financial www.aicpa.org. Printed copies (No. Committee has issued two exposure drafts, statements included in written business val­ 060692CPA02) can be ordered from the Proposed Statement on uations from the applicability Member Satisfaction Center (see page 7; Standards for Accounting and of SSARS No. 1. price: $11.50 member, $14 non-member). Review Services, Amendment to accounting Copies of the exposure drafts It also will be printed in an upcoming Statement on Standards fo r & auditing may be obtained through the Journal of Accountancy. Accounting and Review news Member Satisfaction Center Services No. 1, Compilation (see page 7; first copy is free) AICPA Literature Amended to (No. 800140CPA02) and Proposed or from www.aicpa.org/members/div/audit- Statement on Standards for Accounting and std/drafts.htm. Copies have been provided to Reflect NAIC’s Rules Review Services, Review of Financial the standing order list for those to receive As a result of the completion of the codifi­ Statements and Financial Statements exposure drafts. cation project of the National Association of Included in Written Business Valuations Insurance Commissioners and the issuance (No. 800139CPA02). Comments for both SAS No. 90 on Audit Committee of the revised Accounting Practices and exposure drafts are due June 9. Procedures Manual (effective Jan. 1, 2001), Under the proposal to amend SSARS Communications Issued AICPA literature, including statements of No. 1, if the accountant submits unaudited The Auditing Standards Board has issued position and audit interpretations containing financial statements to a client or third Statement on Auditing Standards No. 90, references to statutory accounting, had to be party, the accountant should at a minimum Audit Committee Communications, which amended. The AICPA supported the codifi­ compile the financial statements. This con­ amends SAS No. 61, Communication With cation because it believes that a comprehen­ cept is similar to that currently found in Audit Committees, and SAS No. 71, Interim sive, consistent and comparable framework SSARS No. 1; however, if the financial Financial Information. SAS No. 90 is in is in the best interest of the insurance indus­ statements are not expected to be used by a response to recommendations numbered 8 try as a whole. third party, this proposal provides the and 10 in the report of The Blue Ribbon The following AICPA literature has been accountant with communication options Committee on Improving the Effectiveness amended to reflect the conforming changes: when compiling those financial statements. of Corporate Audit Committees, which sug­ • SOP 95-5, Auditor’s Reporting on The communication options include gest changes to GAAS. Statutory Financial Statements of issuing a compilation report, but also The amendment to SAS No. 61 requires Insurance Enterprises include obtaining an engagement letter or an auditor to discuss certain information • SOP 94-1, Inquiries of State Insurance issuing a letter to management prior to or at relating to the auditor’s judgments about the Regulators the time when the financial statements are quality, not just the acceptability, of the com­ • SOP 94-5, Disclosures of Certain issued to the client. If the engagement letter pany’s accounting principles with the audit Matters in the Financial Statements of or the letter to management are utilized, the committees of SEC clients, and encourages a Insurance Enterprises accountant is required to document an three-way discussion among the auditor, • Interpretation 12 of AICPA Professional understanding with the entity regarding the management and the audit committee. Standards, vol. 1, AU Section 623, services to be performed and the limitations The effective date for this amendment Evaluation of the Appropriateness of on the use of the financial statements. If the is for audits of financial statements for Informative Disclosures in Insurance accountant is engaged to report on com­ periods ending on or after Dec. 15, 2000. Enterprises’ Financial Statements piled financial statements or if the accoun­ Earlier application is permitted. Prepared on a Statutory Basis tant submits financial statements to a client The amendment to SAS No. 71 clarifies Susan Jones, [email protected] that are, or reasonably might be expected to that the accountant should communicate to, be, used by a third party, a compilation or be satisfied through discussions with, the report must be issued. Under all situations, audit committee that matters described in Revised Guidance on Audit the accountant must comply with the per­ SAS No. 61 have been communicated to formance requirements of SSARS No. 1 the audit committee by management when Sampling Issued with respect to compilations. they have been identified in the conduct of The AICPA Audit Guide, Audit Sampling, ARSC believes that by offering these interim financial reporting. It also requires has been rescinded. Updated audit sam­ communication options when performing a the accountant of an SEC client to attempt pling guidance is available in a new compilation, the accountant will use his or to discuss with the audit committee the AICPA Auditing Practice Release, Audit her professional judgment as to the type of matters described in SAS No. 61 prior to Sampling (No. 021061CPA02). To obtain communication options appropriate for the the filing of the Form 10-Q. a copy, contact the Member Satisfaction client, provide quality service and appro­ The effective date for this amendment is Center (see page 7; price: $28.50 member, priately respond to the needs of clients. for reviews of interim financial information $31.50 non-member). 4 T he CPA L etter • F ebru ary/M arch 2000

AICPA Establishes Expert Panels to Address tion, the panels are designed to broaden the AICPA’s activities beyond those that were traditionally undertaken by committees, in Business Reporting Issues order to help achieve the Vision, and complement the work of the As part of its effort to revamp the Institute’s volunteer structure Group of 100. The AICPA will begin implementing the new struc­ (The CPA Letter, July 1999), the Board of Directors has approved ture in the first quarter of this year. the establishment of Expert Panels that focus on identifying indus­ The AICPA will continue to use the task force model identified by try-specific business reporting issues with an emphasis on audit and the Board of Directors in July, with the panels identifying projects accounting. Panels are being established in areas in which the mem­ and then handing them off to task forces. The AICPA will leverage bership and the public have a high stake and in which the AICPA off the broad and deep expertise of the membership to undertake the can add significant value. Initially, the AICPA will establish panels projects, as well as to serve on the panels. As discussed in Jan.’s CPA in the following areas: Biotechnology and Pharmaceuticals, Letter, the AICPA will develop a database of member expertise to Computer Auditing and Electronic Delivery, and High Technology, help facilitate that process. To apply for expert panel service, log on which are all new areas of focus, and Employee Benefit Plans, to www.aicpa.org, click on “Find Out About Volunteer Central” and Financial Services, Health Care, and Govemment/Not-for-Profit, follow the directions on that site. Task force opportunities will be which are continuing areas of focus, with some consolidation. announced on the Web site and through other means. The panels enable standards setters, such as AcSEC, the ASB, For more information, contact Arleen Thomas, VP— FASB, and GASB, to continue to leverage the AICPA member­ Professional Standards and Services (212/596-6115, ship’s industry expertise, as well as provide a means for the pro­ [email protected]), or Joel Tanenbaum, Technical Manager, fession to liaise with outside groups, such as regulators. In addi­ Accounting Standards (212/596-6164, [email protected]).

mand as well as by its unique elements. sion modeling, risk analysis, reporting, Professions change their knowledge and research. The latter is broader than our sets. Few would want to be treated by a original competence in financial account­ doctor with the 18th century knowledge set, ing and auditing, but it is in keeping with even if the doctor was universally respected expertise in micro-economic business by his or her 18th century peers. What the measurement that has long been our spe­ Vision Process has brought home to all of cial bailiwick. us is that we need to adapt our The Framework should help academics knowledge to our customers’ needs. to develop curricula that prepare students c hair's As CPAs adapt to the marketplace for the changing world of practice. I hope, by developing new services and the as well, it will stimulate academics to corner AICPA’s service-development sharpen our understanding of our devel­ efforts continue, the profession’s oping body of knowledge. body of knowledge will change. The term “business adviser” is fre­ By Robert K. Elliott, CPA The AICPA Core Competency quently used to describe us, but, in my Chair, AICPA Board of Directors Framework for Entry into the Accounting judgment, it will never serve as the Profession helps define the profession’s generic concept of our profession. We will knowledge. It aligns desirable pre-entry Nothing says so much about us as a profes­ continue to be valued business advisers. education with the Vision. The Framework sion as our knowledge, frequently referred Equally true, business knowledge is was developed by a group headed by to as our “body of knowledge.” It is part of essential to the successful CPA, as the Professor Paula Thomas, to whom we are our identity. A profession’s knowledge dis­ Framework makes clear. But business all indebted. (See www.aicpa.org/edu/ tinguishes it from nonprofessionals. It also knowledge by itself does not distinguish corecomp.htm.) distinguishes one profession from another. us in the marketplace from other profes­ The Framework divides competencies Other things can be used to define our sions. MBAs have a claim as well. What into three groups: personal, business per­ identity—our traditions and achievements, distinguishes us, I believe, is the unique spective, and functional. The personal for example. But our distinctiveness in the mix of our skills and knowledge and how includes our traditional ethical imperatives marketplace depends in the long run on they enable us to leverage knowledge. and a commitment to life-long learning. It whether we have specialized knowledge that With this capability, we can help people also includes problem solving, decision­ is different from that of other service and organizations achieve their objectives making, communication, and leadership providers. through the strategic use of knowledge skills. Business-perspective competencies Sometimes specialized knowledge is and knowledge management systems. I include strategic and critical thinking, unique to a group. For example, astro­ look forward to hearing other views as industry-sector and global perspective, physicists and oncologists have knowledge our transformation continues. sets others find hard to claim. However, client focus, and competence in resource professions can be distinguished by the management. The functional competencies [email protected] mix and depth of the knowledge they com­ include competency in measurement, deci­ F eb r u a r y /M arch 2000 • T he CPA L etter 5

Certain AICPA Illustrative Auditor’s Reports Affected by companies’ financial information prior to the companies filing Recent Amendment to Government Auditing Standards their Quarterly Reports on Form 10-Q or Form 10-QSB with the As noted in the Oct. 1999 CPA Letter, a second commission, and to require that companies include in their proxy amendment to Government Auditing Standards (1994 statements certain disclosures about their audit Revision), Auditor Communication, was issued in committees and reports from their audit committees July 1999. Among other things, for audits performed regulatory containing certain disclosures. The rules are under Government Auditing Standards, the amend­ designed to improve disclosure related to the func­ ment requires the auditor to emphasize in the report matters tioning of corporate audit committees and to enhance on the financial statements the importance of the the reliability and credibility of financial statements reports on compliance with laws and regulations and internal con­ of public companies. trol over financial reporting when these reports are issued sepa­ Registrants must obtain reviews of interim financial informa­ rately from the report on the financial statements. The amendment tion by their independent auditors starting with their Forms 10-Q is effective for financial statement audits of periods ending on or or 10-QSB to be filed for fiscal quarters ending on or after Mar. after Jan. 1; however, earlier application is permissible. 15, 2000. Registrants must comply with the new proxy and infor­ As a result of the amendment, the illustrative auditor’s reports on mation disclosure requirements (e.g., the requirement to include a the financial statements included in the Audit and Accounting report of their audit committee in their proxy statements, provide Guide Audits of State and Local Governmental Units, and in disclosures regarding the independence of their audit committee Statement of Position 98-3, Audits of States, Local Governments, members, and attach a copy of the audit committee’s charter) for and Not-for-Profit Organizations Receiving Federal Awards (which all proxy and information statements relating to votes of share­ is included as an Appendix to the Audit and Accounting Guides holders occurring after Dec. 15, 2000. Companies that become Audits of State and Local Governmental Units and Not-for-Profit subject to Item 302(a) of Regulation S-K as a result of these Organizations) need revision. The necessary revision will be made amendments must comply with its requirements after Dec. 15, in the bound versions of these publications along with any other 2000. Registrants voluntarily may comply with any of the new needed conforming changes in mid-2000 (watch future issues of requirements prior to the compliance dates. The final rule is avail­ this newsletter for product availability information). In the mean­ able at www.sec.gov. The AICPA’s comment letter on the SEC time, the illustrative financial statement reports available at proposal is available at www.aicpa.org/belt/index.htm. www.aicpa.org/belt/al33main.htm have been revised to reflect the new HUD Permanently Extends Deadline for Filing Audited requirement. Specifically, see Examples 1 and 1a on the Web site for Financial Statements the new financial statement report wording. In response to AICPA efforts to relieve workload compression for SEC Adopts New Rules, Amendments on Reviewing Financial CPAs, the U.S. Department of Housing and Urban Development has Statements permanently extended the filing deadline for audited financial state­ The SEC is adopting new rules and amendments to its current ments for multi-family projects to 90 days after the project’s year rules to require that companies’ independent auditors review the end. Visit www.hud.gov/reac/secondcycle.pdf for more information.

Highlights of Board of Directors’ December 1999 Meeting Among other actions at its meeting on SWG has met to refine the G-100 input rent call for a new self-regulatory or Dec. 9-10, 1999, the AICPA Board of into specific task force charges and to self-disciplinary organization Directors: coordinate them with existing projects. (SRO/SDO) and discussed various • Heard recommendations to establish • Authorized exposure of proposed approaches being considered in answer broad industry expert panels that changes to CPE standards that would to the charges that the present system would support members who practice reorient CPE to competency enhance­ is ineffective. Issues discussed in specialized industries and provide a ment and career development and rec­ included the need to protect members forum for members to identify and dis­ ognize self-directed learning, consis­ from civil liability and multiple regula­ cuss emerging and current issues, tent with previous board directives and tory proceedings, implications for including Vision-aligned activities. The Council presentations. The new stan­ auditors of public and private entities, board agreed that the structure con­ dards are to be promulgated jointly and public awareness of and confi­ forms to the new task-force model. with NASBA. dence in the current system. (See page 4.) • Ratified a vendor agreement initiated • Discussed a proposal for restructuring • Was updated on the recent inaugural by the Center for Investment Advisory the International Federation of meeting of the Group of 100 (G-100) Services to provide custody and clear­ Accountants that would create a and the Strategy Working Group ing services. (See page 1.) global, SECPS-like system with the (SWG). The G-100 meeting generated • Was briefed on the profession’s current objective of improving global audit more than 200 project ideas for future self-regulatory system. The briefing quality. The board encouraged IFAC to action and prioritized these ideas. The probed the reasons for the SEC’s cur­ act expeditiously. 6 T he CPA L etter • F ebru ary /M arch 2000

As a result of investigations of alleged violations of the Code of Code of Professional Conduct of the AICPA in connection Professional Conduct of the AICPA and/or state CPA societies, with her performance of professional services as the controller the following ethics cases have been resolved by settlement of U.S. operations for a publicly held company. Without agreement under the Joint Ethics Enforcement Program: admitting or denying the charges, Ms. Green agreed to a two- • C. Bernard Didier of St. Louis Park, Minn., settled charges on year suspension of her membership in the AICPA and to suc­ Oct. 22, 1999, of violating Rules 201(B) - Due Professional cessfully complete 85 hours of specified CPE courses during Care and 202 - Compliance with Standards of the Codes of the suspension period. Professional Conduct of the AICPA and the Minnesota • Vern R. Bowling of Manistee, Mich., settled charges on Dec. Society of CPAs (MNCPA) in connection with his 20, 1999, of violating AICPA Bylaw 7.4.6 by failing audit of the financial statements of an employee to comply with the directives of a June 8, 1993, let­ benefit plan. Without admitting or denying the ter of required corrective action and a May 31, 1996, charges, Mr. Didier agreed to a two-year suspen­ disciplinary settlement agreement. Without admitting or denying sion of his membership in the AICPA and the actions the charges, Mr. Bowling agreed to be expelled from MNCPA, to successfully complete 66 hours of membership in the AICPA. specified CPE courses during the suspension period, and to • Carl E. Mangum of Morris Plains, N.J., settled charges on undergo a preissuance review of all audit, attestation, review Dec. 15, 1999, of violating Rule 501 - Acts Discreditable of and compilation (where the financial statements include foot­ the Codes of Professional Conduct of the AICPA, the New note disclosures) engagements for a period of one year. York State Society of CPAs (NYSSCPA) and the New Jersey • James H. Wurdelman of St. Louis Park, Minn., settled charges Society of CPAs (NJSCPA) by failing to timely file his federal on Oct. 22, 1999, of violating Rules 201(B) - Due individual tax returns for the years 1990 through 1996. Professional Care and 202 - Compliance with Standards of the Without admitting or denying the charges, Mr. Mangum Codes of Professional Conduct of the AICPA and the agreed to a one-year suspension from the AICPA, the NYSS­ Minnesota Society of CPAs (MNCPA) in connection with his CPA and the NJSCPA and to successfully complete 8 hours of audit of the financial statements of an employee benefit plan. CPE during the suspension period. Without admitting or denying the charges, Mr. Wurdelman agreed to a two-year suspension of his membership in the As a result of decisions by hearing panels of the Joint Trial AICPA and the MNCPA, to successfully complete 66 hours of Board, the following members have had their AICPA member­ specified CPE courses during the suspension period, and to ships: undergo a preissuance review of all audit, attestation, review — Term inated: and compilation (where the financial statements include foot­ • David R. Rice of Ossining, N.Y., effective Nov. 13, 1999, for note disclosures) engagements for a period of one year. violating AICPA Bylaw 7.4.6 by failing to cooperate with the • Robert J. Neprud of Beverly Hills, Calif., settled charges on Technical Standards Subcommittee in an investigation of his Nov. 6, 1999, of violating Rule 501 - Acts Discreditable of the professional conduct. Code of Professional Conduct of the AICPA by disclosing • Alan L. Grossman of Valley Stream, N.Y., effective Nov. 13, confidential insider information. Without admitting or denying 1999, for violating AICPA Bylaw 7.4.6 by failing to comply the charges, Mr. Neprud agreed to be suspended for six with the directive of a letter of required corrective action and months from membership in the AICPA and to successfully to respond to communications regarding his non-compliance. complete 8 hours of specified CPE during the suspension • B.J. Thomas of Houston, effective Nov. 24, 1999, for violating period. AICPA Bylaw 7.4.6 by failing to cooperate with the • Lawrence E. DeBrunner of Fort Lauderdale, Fla., settled Professional Ethics Division in an investigation of his profes­ charges on Nov. 16, 1999, of violating Rule 202 - Compliance sional conduct. with Standards of the Code of Professional Conduct of the AICPA in connection with his audit of the financial statements Following denials by ad hoc committees of the Joint Trial Board of a cooperative apartment corporation that received federal of requests for reviews of decisions of the original trial board, the assistance. Without admitting or denying the charges, Mr. following members have had their AICPA memberships: DeBrunner agreed to a two-year suspension of his member­ — Term inated: ship in the AICPA, during which time he is to successfully • Bruce T. Andersen of North Hollywood, Calif., effective Oct. complete 60 hours of specified CPE courses, and submit a 25, 1999, for violating AICPA Bylaw 7.4.6 by failing to written attestation regarding whether he has performed any respond to requests for information from the AICPA’s audit, attestation, review or compilation engagements. Should Professional Ethics Division in its attempt to investigate his he state that he has performed any such engagements, he alleged misconduct. would be required to submit a work product to the AICPA • Thomas M. Isdaner of Crafton, Md., effective Oct. 25, 1999, for Professional Ethics Division for review. violating AICPA Rule 501 - Acts Discreditable of the AICPA • Joy Schneider Green of Boca Raton, Fla., settled charges on Code of Professional Conduct in connection with his failure to Nov. 16, 1999, of violating Rule 102 - Integrity and comply with the Joint Trial Board’s directive to cooperate with Objectivity (Interpretations 102-1, 102-3 and 102-4) of the the ethics division investigation of his alleged misconduct. mm F ebruary/M arch 2000 • T he CPA L etter7

A CPA’s Guide to Estate Planning accounting methods to auditing and review private foundations; joint ventures and Techniques for the Closely-Held Business services performed by outside CPAs and alternative structures; charitable organiza­ Owner (No. 091006CPA02) is tailored for important tax rules for contractors. Topics tions; practical examples and case studies; experienced practitioners and examines include accounting for long-term construc­ and more. Price: $36 member, $45 non­ the application of mainstream and innova­ tion contracts; auditing a construction con­ member. Available Feb. 28. tive estate planning techniques for owners tractor; detailed analytical review proce­ of closely-held businesses. Derived from dures; internal controls and substantive Taxlnterest Software (No. 016566hsCPA02). the best-selling CPE self-study course, it procedures; taxation of construction con­ Accurately calculate federal and state discusses federal tax issues covering tractors and recent tax law ______interest. Quickly check the income, gifts and estates as well as key changes; and how tax rules numbers on an IRS notice, or non-tax business considerations. differ from GAAP. Price: now determine the correct amount Highlights include gift programs for $36 member, $45 non­ due with a late return or settle­ closely-held business interests; buy-sell member. Available Feb. 28. available ment. Unique features: calcula­ agreements; choice of entity issues, tions for old years and multiple- including family partnerships; effective A CPA’s Basic Guide to Credit and year deficiencies; negligence, fraud and planning through life insurance; family Collection Techniques (No. accuracy penalties; GATT and “Hot” inter­ equalization issues; the $1,300,000 estate 091001CPA02) provides practical tech­ est rates; multiple payments and payment tax deduction; and illustrative case studies. niques and procedures for collecting allocation; rates and methods for over 35 Price: $36 member, $45 non-member. money: when to use credit as a marketing states - and the ability to update interest Available Feb. 15. tool, sample scripts, guidelines for dealing rates and create custom tables for addi­ with difficult debtors, eight special tech­ tional states, cities, etc. Price: $99 mem­ Pension Distributions: Planning niques for collecting from accounts payable ber, $129 non-member. Strategies, Cases and Rulings (No. departments, how to anticipate possible 017135CPA02) offers the practical aspects bankruptcies, how to know whether or not TValue Software (No. 016544hsCPA02) of key rulings - what you need to know to to file a lien against a debtor’s estate, skip helps you perform interest calculations reduce your practice’s exposure - in an tracing techniques, how to tell whether you quickly and easily, no matter how complex organized, easy-to-use format that allows really have a human resources problem and the time-value-of-money calculations are. for immediate use. It contains sample not a collection problem, how to compel Just enter the dates, rates and amounts and forms and also includes Brentmark the debtor to make the first offer of settle­ TValue calculates payment amounts, Software’s Minimum Distribution ment, and other proven techniques. Based yields, lease and loan terms, balloon pay­ Calculator (a $49 value). Topics covered on the best-selling CPE self-study course. off amounts, present and future values, include retirement distributions, naming Price: $36 member, $45 non-member. remaining balances and more. Print com­ beneficiaries, trust as beneficiary, QTIP Available Mar. 15. prehensive amortization schedules that can trust as beneficiary, Roth IRAs, reversion be exported for use with spreadsheet and tax, income in respect to decedent, chari­ A CPA’s Guide to Getting Started with word processing programs. Price: $99 ties and retirement assets, and more. Price: Not-for-Profit Organization Tax Issues member, $149 non-member. $89.95 member, $112.50 non-member. (No. 091003CPA02) is for public practi­ tioners as well as financial managers who To order, write: AICPA Member A CPA’s Guide to Accounting, Auditing, need to know how not-for-profits work, Satisfaction Team, CPA02, P.O. Box and Tax for Construction Contractors their fundamental tax problems, and how 2209, Jersey City, NJ 07303-2209; (No. 091000CPA02) is for CPAs in both to achieve tax savings and address special fax, 800/362-5066; call 888/777-7077 industry and public practice. This new needs to overcome commonly faced obsta­ (8:30 a.m. to 7:00 p.m., ET); or e-mail guide, derived from the best-selling CPE cles. Based on the best-selling CPE self- [email protected]. Prices do not self-study course, reviews all of the spe­ study course, topics in this new publica­ include shipping and handling. cialized requirements that affect contrac­ tion include qualifying for not-for-profit Have membership number ready. tors. It covers everything from GAAP status; unrelated business income taxes;

Center for Excellence in Financial Management From the survey, baseline information will be obtained con­ cerning areas of impact and current perspectives on how perfor­ Researches Best Practices in Performance mance measurement systems influence the enterprise. Follow-up Measurement research will profile specific case examples from major compa­ nies. The results of the research will be shared with respondents You can assist the AICPA’s Center for Excellence in Financial and all responses will be held in strict confidence. Responses are Management in its performance measurement study by completing requested by Feb. 29. Maisel Consulting Group is the primary a questionnaire on our Web site (www.aicpa.org/cefm/research.htm). research organization conducting the research. For more informa­ This survey is the first step in a major research project to better tion, contact: Lawrence Maisel ([email protected]) or Hadassah understand performance measurement systems. Baum ([email protected]). 8 The CPA Letter • February/March 2000

The CPA Letter Continues to Earn High Ratings from Membership, Survey Shows Results from The CPA Letter’s fifth readership survey show the In keeping with the times, approximately 90% of members said newsletter continues to be a valuable communications vehicle they had the capability to receive the newsletter electronically, up serving members’ information needs. More than 4,000 question­ significantly from 69% in the 1997 survey. Along those lines, when naires were mailed to randomly selected members in all member­ those who had the capability were asked if they would prefer or be ship segments last fall. Here are some of the key findings of the willing to receive it online only (i.e., no print version), 61% said comprehensive research effort. “yes” compared to only 34% of members in 1997. Consistent with results from the prior survey, more than 8 in 10 Members interested in obtaining a copy of the report’s members give the newsletter an overall rating of “excellent” or “Summary of Findings” should contact Joe Bass in Public “good.” Nearly one-third of respondents said the newsletter is Relations ([email protected]; 212/596-6116). Comments and rec­ more useful to them now than it was two years ago, with another ommendations will be reviewed with an eye toward further 43% saying it remains as useful as before. Also, 54% said they improving the newsletter. Thank you for your input and support of read the publication within two days of receipt, up slightly from The CPA Letter. 51% in the last two surveys (conducted in 1997 and 1995); about 78% in total read it within five days. In addition, 90% of members who receive a member-segment supplement said it was a worth­ Member Satisfaction Center while part of the newsletter (up from 85% in the 1997 survey). • Address/membership information Questions assessing usefulness of and interest in certain features • Orders and inquiries and topics were asked as well. Almost two-thirds of members said • Subscriptions “The Year in Review.. .The Year Ahead” annual feature was useful. • Conference registrations Topics highly rated as interesting included incorporating informa­ • Network licenses. tion technology into the profession (94%), efforts to create nation­ wide reciprocity in licensing (76%), accreditation programs/spe­ 888/777-7077 FS [email protected] cialty designations (75%), and the CPA Vision Process (68%). Soft Voice Mail Box comments, topics, such as leadership skills, salary trends and interviewing

a 888/999-9252 skills, also were deemed of interest by respondents.

DRS SRIE REQUESTED SERVICE ADDRESS

21 vne f h Aeia, e Yr, .. 10036-8775 N.Y. York, New Americas, the of Avenue 1211

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continued on page 8 on continued until May A 30. final specifi­ sive. sive. By providing the means to industry analysts to base their collect, store financial and information distribute in consis­ tent formats, XFRML makes it easier for accountants and Student internships and field study. 1. 1. As a result of the G-100 recommenda­ Review the specification online at XFRML’s potential benefits are exten­ local-economy settings. The program should internship) programs and develop an AICPA field-study program or programs appropriate to varying educational-institutionalencompass and the concepts of the repositionedprofession, going beyond accounting pro- including a summary charter. Review the concept of field-study (e.g., tions, four new task forces are being formed immediately. Here is information on each, www.xfrml.org Organizations interested in participating in cation is expected to be issued by July the 1. project or commenting on the tion specifica­ shouldaicpa.org. kwaller@ e-mail Karyn Waller at ous data. Along with being platform-inde­ of financial reporting information between sists of 30 participants including the Big 5 financial activities on clear and unambigu­ computer applications, thus vastly increasing the number of reports that can be cally automati­generated. soon will be announced by the AICPA’s accounting firms, software companies, fessional pro­ associations and standardbrokerage houses and setters, consulting companies. examinations or descriptions of a company’s pendent, XFRML also facilitates the transfer XFRML Steering Committee, which con­ technology

disclose any more infor­ not

Designed for commercial and industrial XFRML does Profession, Services 100 100 (G-100) at its inaugural meeting last fall Group of 100 Makes Progress to Advance New Specification for Financial Reporting Available for Comment advancing the profession and its services in ied and discussed by the Strategy Working into the work of an existing group, currently projects being addressed, and projectsto be addressed at this not time. As has been reported, theGroup AICPA’s of made more than 200 recommendations for the public interest. Subsequently,these recommendations each was of carefully stud­ Group. The recommendations were rized catego­ into four areas: potentialnew projectstask forces, for projects to be integrated specification is designed to facilitate elec­ enterprises reporting in U.S. GAAP, the new tronic preparation and exchange of financial reporting data. The project’s formal name an international focus and will facilitate development of the specifications for other indus­ mation than is requiredmakes to this be requiredreported. informationmanage It and share. Theeasier XFRML projectto has tries and other versions countries’ ofGAAP. series of XML-based specifications, services to them a standards- and analyze financial reports and the infor­ accountants, investors, and oth­ ers who create and use financial information as well as the ven­ dors who provide software and based way to prepare, publish, exchange, mation they contain. able for comment. XFRML electronic is a consistent language for tion, financial reporting and informa­ analysis. Composed of a XFRML will allow companies, based FinancialLanguage (code-named XFRML) Reporting is avail­ Markup

The first specification within the XML- CPA Letter CPA

VoI.80 No. 3 A membership referen­ proposals to amend the of Professional Conduct (The CPA Feb./Mar.). Letter, Memberswho have not received 888/637-3277 to obtain business on May be on to May business 15 received by the close of counted. dum is under way on Code Bylaws and AICPA ballot packets should call should packets ballot new ones. Votes must be Highlights 12 11 Changes Sought by AICPA Division Investigation Activity House Passes LawTax 7 Annual Report ofEthics Nominations Committee New CPE Standards Released as Exposure Draft Statement ofPosition 5&6 00-1 00-1 Issued Report ofthe Driving the Vision Home 3 4 News News Report to Members April 2000 A

A merican Institute O f C ertified Public A ccountants The CPA Letter • April 2000

Department of Commerce, SEC Department at 615/880-4200. resulting front page and full-page cover­ Looking for CPAs Recommended CPE credit: 6 hours. age in the Money section splendidly show­ cased the CPA profession in a publication The U.S. Department of Commerce Number of ABV Holders that is read by more than two million in D.C. is searching for CPAs to n e w s Increasing; Next Exam Americans each day. perform investigations of foreign The AICPA coordinates staffing of the manufacturers under the U.S. fair briefs Nov. 6 hotline with help from the Virginia, Maryland trade laws. Knowledge of GAAP, The third Accredited in Business and Greater Washington CPA societies. GAAS and cost-accounting systems Valuation Exam was administered Several CPAs traveled at their own expense for manufacturing enterprises is necessary. on Nov. 1, 1999. Of 351 candidates who from as far away as Arizona, Minnesota, Some international travel is required. sat for the eight-hour written exam, 241 Pennsylvania and New York to the paper’s Experience with a CPA firm and/or work credentials were awarded. A list of all headquarters near Washington, D.C. with international corporations is highly 1,090 credential holders from the three CPAs interested in volunteering for desirable. Starting salary range: $51,138 to exams given so far is available on the next year’s hotline should contact Lynn $63,072. Must be a U.S. citizen to apply. AICPA Web site at www.aicpa.org/mem- Drake at 202/434-9214 or e-mail Travel expenses for interviews cannot be bers/div/mcs/abvdir.htm. [email protected]. reimbursed. Fax resume to Carolyn at CPAs seeking to earn the ABV creden­ 202/482-4795 or 202/482-4776. tial may obtain information about the pro­ CPA Letter Supplements, The SEC Division of Corporation gram from a candidate handbook that will Finance has openings for CPAs to work on be available online — along with a pro­ “ Practice Alert” Available hot IPOs, change accounting standards gram application and experience affidavit. To obtain any of the member-segment and practices, and interact with top profes­ Information about the exam sites and supplements produced this month with sionals in the securities industry. A mini­ review course will be available online in The CPA Letter. mum of 3 years’ experience in a public May. Also next month the ABV informa­ Dial 201/938-3787 from a fax accounting firm or public company deal­ tion kit will be updated and available machine and key in document nos.: ing with SEC reporting is required. Salary through the AICPA 24-Hour Fax Hotline large firms, 1557; medium firms, 1558; range: $51,650-$79,155. For more infor­ (dial 201/938-3787 from a fax machine small firms, 1559; business & industry, mation, call 202/942-2960. and key in document nos. 492, 493 and 1560; internal audit, 1561; government, 494). Applications must be received by 1562; and education, 1563. For Practice Ethics Forum 2000 Scheduled Aug. 31 for the Monday, Nov. 6, 2000, Alert 00-2, use 1566. for Later this Month exam. ABV program candidates with questions can phone the ABV HELPline at www.aicpa.org/pubs/cpaltr/index.htm The AICPA in conjunction with the 888/777-7077; fax their question(s) to the American Accounting Association and the ABV FAXline at 888/445-3999; or phone National Association of State Boards of Madelaine Feldman, ABV Program Accountancy is offering Ethics Forum Coordinator, at 201/938-3653 (or e-mail PUBLIC MEETING NOTICES 2000, “Ethical Challenges in the New [email protected]). Millennium.” The forum, to be held Apr. For detailed agendas, dial 201/938-3787 28 in Virginia, will feature prominent from a fax machine and key in document no. speakers in a format developed to provide 54 CPAs Answer Questions 1206 two weeks prior to these meetings. participants ample time for questions and During Hotline USA Today Tax Accounting & Review Services answers. Among the speakers will be SEC A heartfelt “thank you” to the 54 CPAs Chief Accountant Lynn Turner, City Committee: Apr. 27-28, New York; July who answered 1,506 tax questions from University of New York Professor 20-21, San Francisco; Aug. 17-18, Boston USA Today readers during the newspaper’s Douglas Carmichael, and International Accounting Standards Executive Federation of Accountants Ethics annual tax hotline on Mar. 2. The hottest Committee: Apr. 25-26, New York Committee Chair Marilyn Pendergast. topics this year included gains and losses Details about the conference are available on stocks, early withdrawals from retire­ Other Meetings on the NASBA Web site (www.nasba.org) ment plans, capital gains exclusion on the Peer Review Board: May 1-2, or by calling the NASBA Meeting sale of a home and IRA withdrawals. The Washington, D.C.

The CPA Letter (ISSN 0094-792x) April 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] A pril 2000 • T he CPA L etter 3

recent evidence of rules violations. The audit.”) largest accounting firms are the typical tar­ Meanwhile, firms have been lambasted gets, but the charges damage the whole for violations of rules that do not affect profession and confidence in the capital audit objectivity or audit quality. markets. Immaterial holdings by parties who cannot We must always obey the independence influence an audit do not affect the public rules we are committed to follow. And interest. While we must regret every every reader knows we as a profes­ infraction and recommit ourselves to flaw­ sion must stand for audit quality less compliance, we must also ask the c hair's because it is a public trust. So we right questions. cannot ignore the charges. Are investors’ needs served by damag­ c orner What are the facts? It appears we ing confidence in the markets with unsub­ are being bashed unfairly on audit stantiated charges of lower audit quality? quality. The accusations were not based on Can the SEC, with all sorts of responsibili­ By Robert K. Elliott, CPA generalizable evidence of defective audits. ties, budgetary pressures, well-known lim­ Chair, AICPA Board of Directors No audits have had to be re-performed itations on the usefulness of currently The profusion of press articles on audit because independence violations damaged required financial statements, and bur­ independence marks a new phase in our audit quality, and when respected data on geoning Internet trading and disclosure, history. In the past, journalistic attention audit quality became available, they got justify emphasizing rules that do not affect peaked when declines in the business cycle little attention. audit quality? Will the SEC staff study led to bankruptcies and lawsuits alleging Research by COSO (a consortium of (announced as of this writing) of indepen­ audit failure were brought on behalf of accountancy bodies including the AICPA) dence rules that need to be modernized be those who lost money. Independence was on fraudulent financial reporting has been realistic, or will it gloss the issue? not an issue. Now allegations of soft inde­ published, and from its data on SEC disci­ Auditors must fight against contempt pendence have been linked to accusations plinary actions I derived an audit failure for rules that impose costs but do not of bad auditing, even though no evidence rate of .0001 for the firms auditing a large affect audit quality, especially when of damaged audit quality has been brought majority of public companies, a rate con­ goaded by press coverage that diminishes to bear. sistent with a high level of audit quality. our reputations. This is a time for con­ In part this is the result of the higher The estimate covers the 11 years from structive attitudes. We must work through profile independence has assumed with the 1987 through 1997, a period running well the ISB to rationalize the rules, while establishment of the Independence into the current SEC chairman’s tenure. (I obeying every requirement to the letter and Standards Board (ISB). But it is primarily defined an audit failure as an auditor’s countering misstatements when they are the result of the SEC’s public accusations. being named in an SEC Accounting and made. Some members of the press took the accu­ Auditing Enforcement Release for “appar­ [email protected] sations as worth repeating long before ent involvement” or a “substandard

Driving the Vision Home “In a complex, rapidly changing world, a clear sense of direction the organizations serving the profession. The Vision Team— which and compelling principles (purpose) about conduct in pursuit of it includes AICPA and state CPA society representatives as well as are far more effective than long-term plans and detailed objec­ members— has built the case for change in all of the state societies tives." and the AICPA. In less than one year, almost 40 separate nonprofit —Dee Hock, founder and CEO Emeritus of VISA institutions, driven by a common desire to better serve the profes­ International, in “Birth of the Chaordic Age.” sion and respond to market forces, have started signifi­ Long-term planning is a thing of the past. Real-time cant change implementation. These organizations have information and the speed of technology make most cpa vision also begun to share information and collaborate on a long-term plans obsolete before they hit the starting scale never before imagined. gate. Dee Hock, founder of Visa International, under­ process The CPA Vision Team’s latest effort to drive change stands that success in today’s business climate is only into the organizations serving the profession is 3-day achieved by balancing the chaos of competition with workshops for the AICPA and state societies that the cooperation of order. Hock dubs this dynamic mix of chaos teach strategic planning techniques. Instead of a top-down and order the “Chaordic Age.” While traditional top-down organi­ approach to decision-making, the “Strategic Facilitation Process” zations are experiencing an increasing failure rate, those that are from Grove Consultants International helps groups make deci­ able to blend cooperation and competition will rise to the top. sions and forge commitment through consensus building and That is why the National CPA Vision Team’s implementation timely group buy-in. “The Grove process is a unique method to strategy included an initiative to change the profession by changing continued on page 11 T he CPA L etter • A pril 2000 mam

AITF Issues Interpretations on Audit Reports, Related Party party revenues and related receivables, and provides guidance Disclosures regarding the sufficiency of evidential matter and reporting on The Audit Issues Task Force of the Auditing Standards Board financial statements of health care entities exposed to material recently issued two auditing interpretations. An interpretation of uncertainties. The SOP is effective for audits of periods ending Statement on Auditing Standards No. 58, Reports on Audited on or after June 30, 2000, with early application permitted. Financial Statements, states that auditors may indi­ Obtain the SOP through the Member Satisfaction cate in the auditor’s report the country of origin of Center (see page 9; price: $10.50 member; $13 non­ the accounting standards used in the preparation of accounting member). the financial statements and the auditing standards & auditing Senate Banking Committee Holds Hearing to followed in performing the audit. An interpretation news Scrutinize FASB’s Pooling of Interests Project of SAS No. 45, Related Parties, provides guidance The Senate Banking Committee recently held a on management’s and auditor’s responsibilities for related party hearing to scrutinize the Financial Accounting Standards disclosures that are prefaced by such terminology as “manage­ Board’s project to eliminate the pooling of interests method of ment believes that” or “it is the company’s belief that.” The accounting in corporate mergers. The hearing represents interpretations are available on the AICPA Web site Congress’s most recent attempt to influence the private sector (www.aicpa.org/members/div/auditstd/announce/index.htm) and standards-setting process. The AICPA believes financial report­ will be published in the May Journal of Accountancy. ing standards can best be set by a professional, independent pri­ Statement of Position 00-1 Issued vate-sector standard-setting body rather than by the government. Statement of Position 00-1, Auditing Health Care Third-Party At the hearing, representatives from the high technology com­ Revenues and Related Receivables (No. 014926CLA04), has munity testified in opposition to the FASB project. FASB been issued. The SOP provides guidance to auditors regarding Chairman Edmund Jenkins testified in defense of FASB’s uncertainties inherent in health care third-party revenue recogni­ process and its proposal to require the purchase method of tion. It discusses auditing matters to consider in testing third- accounting for all business combinations.

Major New Tool Available Offering Leading-Edge Practices for Finance and Accounting Professionals Key issues and challenges facing business The new Series represents a major col­ $60/$75); Customer and Supplier Value today are presented and examined in the laborative effort between the Center for Chain (#CSV000; $ 135/$ 168.75); new Strategic Management Series, a Excellence in Financial Management Information Technology (#ITN000; flagship publication of the AICPA’s (CEFM) and CMA-Canada. A proven $60/$75); Treasury Management Center for Excellence in Financial resource for helping accounting and finan­ (#TMG000; $45/$56.25); Change Management. The 8-volume Series (for­ cial professionals become more valuable Management (#CMG000; $120/$ 150); merly available as the New Finance strategic partners in organizations, the Management Control (#MCN000; Handbook) comprises the broad, cross­ Strategic Management Series consists of $60/$75); Stakeholder Reporting functional knowledge base that is fast these critical topic areas: Strategic Cost (#SRP000; $105/$131.25); and the entire becoming standard operating procedure Management (#SCT000; $195 member, 8-volume Series (#SMS000; $520/$650). for the nation’s top corporate finance and $243.75 non-member); Strategic To order, contact the Member accounting professionals. Performance Measurement (#SPM000; Satisfaction Center (see page 9). Highlights of Board of Directors’ February Meeting Among other actions at its Feb. 10-11 meeting, the AICPA to consider development of the international associate concept. Board of Directors: Approved for circulation and discussion at regional Council • Was presented a white paper on risk management by the meetings a proposal for the integration of the Information Assurance Services Executive Committee, through its Risk Technology Alliance into the AICPA, as previously presented Advisory Services Task Force. The report, which is entitled at the Dec. Board meeting. The proposal would integrate the Managing Risk in the New Economy and was produced jointly ITA into a new AICPA Information Technology Alliance by the AICPA and the Canadian Institute of Chartered Section. The ITA is an association of entities of professionals Accountants, aims to expand the profession’s delivery of risk whose mission is to support its members with practical, unbi­ management services. The task force has developed a com­ ased, timely and proven insight on how to succeed in using mon language and framework for understanding and discus­ technology to advance the competitiveness of its member sion on the topic as well as a series of practice tools and tech­ firms and their clients. niques supporting the risk management process. • Agreed on a new structure for the AICPA Board of Examiners • Heard about the PCPS Executive Committee’s preliminary plan continued on page 9 A pril 2000 • T he CPA L etter 5

REPORT OF THE NOMINATIONS COMMITTEE

To: Members of the American Institute of Certified Public Accountants

Pursuant to Article VI, Section 6.1.6 and 3.3 of the bylaws, the following report of the Nominations Committee is submitted. Richard I. Miller General Counsel & Secretary March 14, 2000

The Nominations Committee hereby proposes the following nominees as Officers, members of the Board of Directors, members of Council-at-Large, elected members of Council, members of the Joint Trial Board and members of the AICPA Peer Review Board. Upon election, the candidates will serve in the positions indicated from the Council/Annual Members’ Meeting, Oct. 21-24, 2000, in Las Vegas until the Annual Members’ Meeting in 2001, 2002, or 2003, as indicated in the report, or until their successors shall be elected:

• Chair of the Board: The Committee affirmed the nomination of the following as Chair of the Board of the Institute for 2000-2001: Kathy G. Eddy, West Virginia

• Vice Chair of the Board: The Committee nominated the following as Vice Chair of the Board of the Institute for 2000-2001: James G. Castellano, Missouri

• Board of Directors: The Committee nominated the following for election as members of the Board of Directors for three-year terms ending in 2003: Lawrence M. Gill, Illinois Janie M. Scott, Kentucky Robert K. Herdman, New York Gordon A. Viere, Minnesota Harold L. Monk Jr., Florida William E. Trueheart (Public Member)

Since William W. Holder, California, is resigning from the Board of Directors effective with the Annual Members’ Meeting in Oct. 2000, the Committee is nominating J. Mason Andres, Arkansas, to complete the unexpired term of William W. Holder ending in Oct. 2001.

• Council Members-at-Large: The Committee nominated the following as Council Members-at-Large for three-year terms ending in 2003: W. Steve Albrecht, Utah Leslie A. Murphy, Michigan Allen Boston, New York Eddie Sams Jr., North Carolina Hubert D. Glover, Texas Judith R. Trepeck, Michigan David A. Lifson, New York

Since Robert K. Herdman is being nominated to the Board of Directors, the Committee also nominated Christine A. Lauber, of Indiana, to fill Robert K. Herdman’s unexpired term of two years ending in 2002.

Since Janie M. Scott is being nominated to the Board of Directors, the Committee also nominated Paula Bevels Thomas, of Tennessee, to fill Janie M. Scott’s unexpired term of one year ending in 2001.

• Elected Members of Council: After consideration of the recommendations submitted by the state CPA societies, in accordance with the provisions of Article VI, Section 6.1.5 of the bylaws, the Committee nominated the following 57 members from 40 jurisdictions as directly elected members of Council. Upon election nominees will serve three-year terms commencing in the Fall of 2000 and ending in 2003: Alaska— Charles H. Rigden Randy W. Moore Arkansas— William C. Foster J. Stephen Nouss California— Janice P. Carr Georgia— J. Sam Johnson Donald L. Gursey Guam— Taling M. Taitano Paul D. Kuperstein Hawaii— Brenda F. Cutwright Michael W. Soza Illinois— Morris M. Oldham Colorado— Charles P. Frederick Duan D. Suits Connecticut— John A. MacLean Vincent E. Villinski Florida— Winston K. Howell continued on page 6 6 T he CPA L etter • A pril 2000

continued from page 5 — Nominations Report North Dakota— Stanley N. Sandvik Indiana— Larry E. Nunn Ohio— Lee G. Beall III Maine— Richard Dana Mark B. LaPlace Maryland— Christine Stewart Oklahoma— David O. Hogan Massachusetts— Richard J. Maloney Pennsylvania— Thomas Bunting III Michigan— Richard B. Hanna Michael J. Rowley Walter S. Koziol South Carolina— Annette H. Ross Minnesota— Richard E. Cornell South Dakota— Mark Engelhart Missouri— Paul W. Wentzien Tennessee— Casey M. Stuart Montana— Robert W. Chrysler Jr. Texas— Nita J. Clyde Nebraska— James R. Greisch Michael W. Griffin Nevada— Debra G. Smith Wanda Lorenz New Hampshire— Michael J. Asselin Gary McIntosh New Jersey— Sharon L. Lamont Vermont— Andrew E. Guyette Kenneth W. Moore Virgin Islands— Vincent R. Anderson New Mexico— Stephen M. Walker Virginia— William J. Madigan Jr. New York— Joseph L. Charles Washington— Marvin Nelson Jeffrey R. Hoops West Virginia— Wallace F. Suttle Henry J. Krostich Wisconsin— Lucretia Mattson Nancy Newman-Limata Wyoming— Stuart K. Webster North Carolina— Joseph D. Pool Jr.

Joint Trial Board: The Committee nominated the following members to serve on the Joint Trial Board for three-year terms ending in 2003: Rene D. Pena, Texas Melinda M. Harper, Colorado Randy E. Davis, Kentucky Stephen H. Epstein, Michigan Carol S. DeHaven, Missouri Robert Lee Vachon, New Hampshire William W. Gleason, West Virginia Carolyn C. Riticher, Georgia Thomas M. Herbert, New Mexico Wes Williams, Indiana Theodore H. Kreinik, Connecticut Sam Yellen, California

• AICPA Peer Review Board: The Committee nominated the following members to fill seven vacancies on the AICPA Peer Review Board for three-year terms ending in 2003: Anthony D. Lynn, Missouri (Chair) Jeffrey K. Mock, Washington Janice L. Gray, Oklahoma Robert L. Prator, Georgia Grady R. Hazel, Louisiana Robert K. Weatherly, Tennessee Delano C. Hoover, Ohio

The Committee will nominate the Officers, Directors and Council Members-at-Large at the Council/Annual Members’ Meeting, Oct. 21-24, 2000, in Las Vegas. No nominations from the floor will be recognized. However, independent nominations may be made by any 20 members of Council if filed with the Secretary by June 24, 2000, which is four months prior to the Annual Members’ Meeting of the Institute to be held in Las Vegas on Oct. 24, 2000. The Committee will also nominate elected members of Council at the Council/Annual Members’ Meeting in Las Vegas. Pursuant to the bylaws, balloting for directly elected Council members in any state where vacancies shall arise will occur only if a contest for one or more seats develops as a result of submission of independent nominations to the Secretary by any 20 Institute members in the state at least four months prior to Oct. 24, 2000. In the absence of any contest, all such Council nominations will be declared elected by the Secretary and they will assume office at the Council Meeting on Oct. 24, 2000. The Committee will also nominate at that meeting the members of the Joint Trial Board and the AICPA Peer Review Board.

Respectfully submitted,

Nominations Committee: Olivia F. Kirtley, Kentucky (Chair) Thomas J. Mulligan, Ohio Carmen J. Aguiar, Washington James H. Naus, Indiana Jerrell A. Atkinson, New Mexico Jean L. Rothbarth, Illinois Brenda Birkett, Louisiana Eric L. Schindler, Montana Robert Bunting, Washington Tom L. Stringfellow, Texas Deborah D. Lambert, Maryland A pril 2000 • T he CPA L etter7

Revised Credit Union Supervisory Committee Audit tions include steering away from seeking “current value” financial Procedures Available reporting of investment-type contracts with insurance companies The National Credit Union Administration has published, as on a plan year basis rather than an insurance contract year basis, Appendix A of the NCUA’s Supervisory Committee Guide for and reworking a schedule for direct filing entities to clarify new Federal Credit Unions, procedures to be completed by the credit rules affecting them. union’s independent auditor when the supervisory committee Employee benefit plans will complete the Form 5500 to report chooses the Supervisory Committee Guide option (in lieu of a on the 1999 plan year and generally will file them in July 2000. financial statement audit or internal control examination) for satis­ The Labor Department’s Pension and Welfare Benefits fying its annual supervisory committee audit requirement. The Administration is making a concerted effort to urge electronic fil­ procedures are effective for engagements performed after Jan. 1, ing through its new Employee Retirement Income Security Act 2000. Filing Acceptance System (EFAST). These revised procedures addressed concerns The IRS began mailing the annual Form 5500 pack­ raised by the AICPA that some of the former NCUA regulatory age with the hand print forms in late Feb. Hand print procedures could not be performed pursuant to an forms also are available by calling the IRS Service agreed-upon procedures engagement under Statement matters Center at 8OO/TAX-FORM (800/829-3676). on Auditing Standards No. 75, Engagements to Apply Information copies of both versions of the forms are Agreed Upon Procedures to Specified Elements, Accounts, or available on PWBA’s Web site at Items of a Financial Statement. The AICPA considers these www.dol.gov/dol/pwba and the EFAST Web site at revised procedures to be appropriate for a SAS No. 75 engage­ www.efast.dol.gov. Forms obtained from the Web sites, however, ment and accordingly, CPAs should perform the revised proce­ cannot be used to file an official Form 5500 report. dures in accordance with SAS No. 75. SEC Issues Concept Release on International Accounting The NCUA’s Supervisory Committee Guide is located at Standards www.ncua.gov/ref/supervisory_comm/supcomm.pdf. Questions On Feb. 16 the SEC issued its long-awaited Concept Release on regarding the procedures should be directed to an NCUA exam­ International Accounting Standards (IAS). The release is seeking iner or a supervising regional office. comments, through a series of 26 questions, to determine under U.S. Department of Labor Issues Form 5500 Annual Report what conditions the SEC should accept foreign private issuers that Package for Employee Benefit Plans prepare financial statements using standards promulgated by the On Feb. 2, federal agencies published the revised Form 5500 International Accounting Standards Committee. The SEC seeks annual reporting series for employee benefit plans, which reflects public input, domestic and foreign, regarding the quality and com­ a number of changes. The new package replaces the Form 5500 prehensiveness of IAS; the experience of auditors, preparers and and the Form 5500-C/R with a single new Form 5500 with basic users with IAS; the existence of a framework for interpreting and identifying information for use by all filers and 13 schedules applying IAS similar to the AICPA’s SECPS peer review require­ focused on particular subjects and filing requirements. A checklist ments; and suggestions for a worldwide regulatory scheme. included in the package guides each filer to the details that apply AICPA committees are currently developing responses to those to the filer’s specific type of plan. questions. Comments are due May 23. When issued, the AICPA’s For the first time, plans will file their Form 5500 with the response will be available on its Web site (www.aicpa.org). The Labor Department instead of with the IRS. Additional modifica­ SEC release can be obtained from www.sec.gov.

New CPE Standards Released as Exposure Draft The AICPA and the National Association self-assessments to determine gaps sponsors. of State Boards of Accountancy have between current and needed competen­ • Introduction of a program reviewer for released for exposure the Joint cies, develop learning objectives arising participants who elect to satisfy more than AICPA/NASBA Statement on Standards from their assessments and prepare action half of their CPE reporting requirements for Continuing Professional Education. plans to fulfill their learning objectives. with self-directed learning activities. These standards focus on adult learning • Recognition of a wide variety of learn­ • Appendices with examples of self- and recognize job-related learning as pro­ ing activities that encompass the many assessments, learning plans, learning logs, fessional development and award CPE ways adults learn today. and a CPE credit record for self-directed credit. Highlights of the exposure draft • Separate standards for sponsored learning activities. include: learning activities-where organizations To review this document, download it • A focus on increasing CPAs’ knowl­ take responsibility for delivery of pro­ from www.aicpa.org/cpe/downcpe.htm. edge, skills and abilities, referred to grams to the final users-and self-directed Comments, which should be directed to within the draft as competencies. learning activities-where the learning John Morrow at the AICPA (e-mail jmor­ • Introduction of the concept of learning activities are undertaken and accom­ [email protected]; phone 212/596-6085), plans, through which CPAs can employ plished without the assistance of outside are due Aug. 1. 8 T 8 he CPA L etter • A pril 2000

AICPA Partners with Paymentech to Provide Credit Card Processing Solutions Paymentech, the nation’s second largest with qualified swipe rates as low as 1.80% will compare, dollar for dollar, the fees bankcard transaction processor and a through Paymentech Merchant Services. associated with your processing and pro­ leader in Internet payments, has been Clients and customers will appreciate vide you with a comprehensive quote. selected to launch a credit card the choice of payment options Paymentech (www.paymentech.com.), processing program specifically and improved customer ser­ founded in 1985, delivers premier payment for AICPA members. member vice. Card acceptance can solutions for merchant acquiring, point-of- Paymentech will provide exclu­ assist them in managing their sale processing and commercial card pro­ sive processing services that news financial matters as necessary grams. It processes approximately 3 billion will enhance members’ cash with their own ability to pay. bankcard transactions annually with $93 flow and payment efficiency. Payment with credit cards billion in credit card sales volume. Under this program, AICPA members allows them to better track their expenses. To receive additional information on have the ability to accept credit card pay­ AICPA members currently processing the AICPA specialized merchant process­ ments at discounted processing rates using cards with another company can receive a ing program offered through Paymentech, state-of-the-art electronic processing with free competitive quote from Paymentech. contact Paymentech’s ProActive Sales no application fees, no installation fees, no To compare your existing costs to that of Group at 888/213-8445 or fax existing conversion fees and no merchant supply the AICPA program, fax two months of merchant processing statements to fees. Members are eligible to receive reli­ your existing processing statements to ProActive Sales at 214/849-3645 for a able, cost-effective credit card processing Paymentech’s Proactive Sales Group. They free competitive analysis.

continued from page 1 — Group of 100 and forecast future use of technology by all constituencies within grams and schools. It should include a plan of action to make the the profession, including the tax practices of public accounting business case to both employers and students that these initiatives firms. The results of the work would be applied to various current are advantageous. and future strategic initiatives. Tasks to be undertaken include the following: 4. Accounting standards. There are two essential components . Survey universities with strong field-study (e.g., internship, to improving the accounting model in use by corporate America: cooperative field- or work-study) programs to develop model (1) develop a better model and (2) convince investors and regula­ field-study programs for use by schools and employers. tors to demand it and capital users to supply it. Past efforts of the . Develop guidelines and related information to encourage profession have focused on the first component without much practice firms, commercial and industrial companies, and govern­ attention to the second, and improvements have been glacial as a mental units to offer field-study programs. result. This task force will focus on the second, and its member­ . Ensure the focus of the field-study experience centers ship will reflect that focus. Unless and until the politics and eco­ around enhancement of core competencies needed for future suc­ nomics of new accounting-model adoption are understood, there cess in the expanded and repositioned profession. is little point in developing better models. The approach should . Consider the role of state CPA societies in facilitating field- include the action steps that will need to be implemented to effect study programs. any new model and marshal support for it. The focus should be on 2. Service to members in industry. This task force will take a articulating the constituencies necessary for closure and develop­ fresh look at the highly diverse needs of industry members — ing plans to align them for support. While technical development especially in view of the potential of new technologies, such as of the model is not part of the recommendation at this time, some the Internet and a proposed AICPA vertical portal — to create and conceptual discussions on likely models may need to take place. deliver an array of more tightly targeted services. Questions to be The charter for a fifth task force on professional ethics is cur­ addressed: What AICPA infrastructure and strategies are needed rently being formulated. to optimize service to industry members? What industries are Bob Rainier, [email protected] served? What is the current array of job functions? What broad strategies will permit the AICPA to optimize service to each niche? 3. Technology practices. Historically, information technology AICPA Seeking CPA Exam Graders was used by members in practice and industry to reduce costs and CPAs and attorneys are needed to assist in grading the May improve efficiency. However, recent uses of technology, such as 2000 Uniform CPA Exam. The grading period will begin on networking and knowledge management, have been focused on May 18 and last approximately 6 weeks. Graders must provide improving the capacity of members to create value for clients and a minimum of three seven-hour days each week; the grading employers. This project is intended to benchmark practice to find offices are open seven days a week. Graders will be paid $15 the most effective uses of technology and to ensure that all mem­ per hour and will receive 16 AICPA CPE credit hours. Contact bers are informed about best practices so they can take advantage David Harris at [email protected]. of them. This task force will develop an overview of current use A pril 2000 • T he CPA L etter9

Codification of Statements on Auditing A CPA’s Guide to Sophisticated Estate will provide the highest amount for heirs? Standards (as of January 1, 2000) (No. Planning Techniques (N o. Incorporating current tax law changes, 057175CPA04). Codified with all amend­ 091007CPA04). Learn how to apply inno­ QuickView is a state-law-sensitive soft­ ments and conforming changes as of vative, cutting-edge techniques to gain tax ware tool that presents answers in seconds 1/1/00, this book offers the most up-to- advantages for the most challenging client about what arrangement will provide the date data. New to the 2000 edition: SAS estates with this new publica­ most for your client and your N o. 80, Service Organizations and tion based on our best-selling client’s family at the least pos­ Reporting on Consistency, SAS No. 89, CPE self-study course. 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continued from page 4 — Highlights of Board Meeting that will diversify its membership to include state accountancy ing to protect the public interest as the environment changes. board members, state board administrators, and psychometric • Was updated on the work of the National Accreditation professionals. The new structure will facilitate reaching out to Commission, including the status of the new information tech­ a broader base of qualified individuals for examination devel­ nology accreditation, plans for upcoming accreditations, the opment, achieving a balance of generalists and specialists potential for accrediting non-CPAs, research, and consistent use needed to develop future computer-based exams, and continu­ of designations. 1 0 T he CPA L etter • A pril 2000

As a result of investigations of alleged violations of the Code of she would be required to complete an additional 78 hours of Professional Conduct of the AICPA and/or state CPA societies, specified CPE courses and to undergo a preissuance review of the following ethics cases have been resolved by settlement agree­ such engagements during the suspension period. ment under the Joint Ethics Enforcement Program: • Joe B. Hansen of Lubbock, Tex., settled charges on Feb. 8, 2000, • Charles R. Pegler, of Islandia, N.Y., settled charges on July 13, of violating Rule 501 - Acts Discreditable of the Code of 1999, of violating Rule 501 - Acts Discreditable of the Code of Professional Conduct of the AICPA and the Texas Society of Professional Conduct of the AICPA and the New CPAs (TSCPA) for his failure to timely file four years of York State Society of CPAs (NYSSCPA) for failing personal income tax returns. Without admitting or deny­ to timely file his firm’s payroll taxes for periods ing the charges, Mr. Hansen agreed to a six-month sus­ between 1983 and 1989, and 1991 through 1994. pension of his membership in the AICPA and the Without admitting or denying the charges, Mr. Pegler actionsdiciplinary TSCPA and to successfully complete 8 hours of speci­ agreed to a two-year suspension of his membership fied CPE during the suspension period. in the AICPA and the NYSSCPA. • W. Rex Woods of Belleville, Kan., settled charges on Feb. 8, • Edward L. Field, of Topeka, Kan., settled charges on Jan. 13, 2000, of violating Rule 501 - Acts Discreditable of the Code of 2000, of violating Rule 501 - Acts Discreditable of the Code of Professional Conduct of the AICPA, the Kansas Society of CPAs Professional Conduct of the AICPA and the Kansas Society of (KSCPA) and the Nebraska Society of CPAs (NSCPA) for his CPAs (KSCPA) for failing to file his personal federal income tax failure to timely pay his firm’s payroll taxes for several quarters. returns in a timely fashion for the years 1991 through 1995 and Without admitting or denying the charges, Mr. Woods agreed to a for failing to pay his tax liabilities on time for the years 1991 six-month suspension of his membership in the AICPA, the through 1996. Without admitting or denying the charges, Mr. KSCPA, and the NSCPA and to successfully complete 8 hours of Field agreed to a six-month suspension of his membership in the specified CPE during the suspension period. AICPA and the KSCPA and to successfully complete 8 hours of As a result of decisions by hearing panels of the Joint Trial Board, specified CPE during the suspension period. the following members have had their AICPA memberships: • Samuel P. Freeman, of Bedford, N.H., settled charges on Jan. 13, —Terminated: 2000, of violating Rule 501 - Acts Discreditable of the Code of • Howard Cutler of Boston, effective Nov. 13, 1999, for violat­ Professional Conduct of the AICPA and the New Hampshire ing the AICPA’s Code of Professional Conduct Rule 501 — Society of CPAs (NHSCPA) for failing to timely file his federal Acts Discreditable for publishing a modified draft financial income tax returns (Form 1040) for 1991 and 1995; for not statement and a misleading statement that the financial state­ timely filing the corporate tax return for Freeman and Associates, ments were not in compliance with the auditing and account­ P.A. for 1995; for not paying timely or at all, the payroll tax lia­ ing guidelines of common interest realty associations. bilities for Freeman & Company for the quarterly periods of June —Suspended: 1992 through Dec. 1993, including the Dec. 1994 and 1995 quar­ • Marvin A. Weinstein of East Meadow, N.Y., effective Nov. 13, ters; and for not paying timely or at all, the payroll tax liabilities 1999, for a two-year period for violating the AICPA’s Code of for Freeman & Associates, P.A. for all the quarterly periods of Professional Conduct Rule 101 - Independence as supported Sept. 1995 through June 1997. Without admitting or denying the by Interpretation 101-1A.4 for acquiring promissory notes of a charges, Mr. Freeman agreed to a one-year suspension of his review client and thus becoming a major creditor of the review membership in the AICPA and the NHSCPA and to successfully client while performing review services and issuing a review complete 8 hours of specified CPE during the suspension period. report. He was also directed to complete 8 hours of specified • Kent E. Bromagen of Dayton, Ohio, settled charges on Feb. 3, CPE during the suspension period. 2000, of violating AICPA Bylaw 7.4.6 by failing to cooperate —Suspended following the denial by an ad hoc committee of the with an investigation of his alleged misconduct. Without admit­ Joint Trial Board of a request for a review of the decision of the ting or denying the charges, Mr. Bromagen agreed to be expelled original trial board: from membership in the AICPA. • Robert G. Krieg of Fenton, Mo., effective Nov. 3, 1999, for a • Teresa Paul Daie of Fountain Hills, Ariz., settled charges on Feb. two-year period for violating the AICPA’s Code of Professional 7, 2000, of violating Rules 201(A) - Professional Competence, Conduct Rules 101 - Independence and 202 - Compliance 201(C) - Planning and Supervision, 202 - Compliance with with Standards in connection with professional services he per­ Standards and 203 - Accounting Principles of the AICPA’s Code formed for a review client. He was also directed to complete of Professional Conduct in connection with her audit of the finan­ 16 hours of specified CPE during the suspension period. cial statements of a not-for-profit organization. Without admitting Under the automatic disciplinary provisions of the Institute’s or denying the charges, Ms. Daie agreed to a two-year suspension bylaws, the following members have had their memberships: of her membership in the AICPA, to successfully complete 8 — Terminated because of final judgments of conviction for crimes hours of specified CPE courses during the suspension period and punishable by imprisonment for more than one year: to submit written attestations regarding whether she has per­ • Melinda B. Colville of Lafayette, La., effective Aug. 18, 1999, formed or plans to perform any audit, review or compilation after pleading guilty to mail fraud. (with footnote disclosures) engagements. Should she state that • Reginald K. Hudson of Fairfax, Va., effective Dec. 7, 1999, she has performed or plans to perform any such engagements, after pleading guilty to bank fraud. A pril 2000 • T he CPA L etter11

• Tyrus C. Young of Honolulu, effective Dec. 7, 1999, after Annual Report of Ethics Division Investigation pleading guilty to conspiracy to defraud the United States. Activity —Terminated following revocation of his CPA certificate/license January 1 - December 31, 1999 by his state board of accountancy: January 1 - December 31, 1998 • Richard W. Black of Dallas, effective Dec. 7, 1999, for practic­ ing with an expired and delinquent license; writing a check to The following is a statistical report from the Professional Ethics the Internal Revenue Service in the client’s name, which was Division of investigation activity for the years ended Dec. 31, returned for insufficient funds; taking funds from a client; and 1999, and 1998. The AICPA and state CPA societies participate in failure to return the client’s records. the Joint Ethics Enforcement Program. This report includes inves­ —Suspended for four months, following suspension of his CPA tigations conducted by state societies resulting in findings of certificate/license by his state board of accountancy: ethics code violations. • Bernard Weiner of Lido Beach, N.Y., effective Sept. 28, 1999, for professional misconduct in connection with the negligence he AICPA committed during the performance of two annual audits of a Ethics Division company. 1999 1998 Investigations open at start of period: Firms Terminated from Peer Review Program Active 489 471 Effective Jan. 24, the following firms were terminated from the Deferred - Litigation 145 157 AICPA Peer Review Program for failure to cooperate with the Peer 634 628 Review Board. Hearing panels deemed that these firms did not com­ Add: Investigations plete the corrective or monitoring actions required as a condition of acceptance of the firms’ most recent peer reviews: Robert J. opened during period 262 302 Droubie, CPA, Clearwater, Fla.; N. Rex Ashley, CPA, PA, Naples, 896 930 Fla.; Frank T. Van Morrelgem, CPA, West Paterson, N.J.; and Brent Less: Investigations James, CPA, PA, Raleigh, N.C. closed during period 273 296 Effective Nov. 19, 1999, the firm of James D. Cook, CPA, Sayre, 623 634 Okla., was terminated from the AICPA Peer Review Program for failure to cooperate with the Peer Review Board by not returning the signed acknowledgement showing the firm’s agreement to take the Investigations open at end of period: corrective or monitoring actions deemed necessary as a result of its most recent peer review. The firm waived its right to a hearing. Active 474 489 Deferred - Litigation 149 145 623 634 continued from page 3 — CPA Vision Process force some order to a plan while still allowing for everyone’s input Summary of Disposition of Closed Cases* and ideas to be incorporated,” says Jeannie Patton, former chair of the CPA Vision Team. “Using this method, the entire group com­ Trial Board 5 14 mits to their ideas, while simultaneously surfacing challenges and Settlement with Publication 54 33 actionable tasks.” Letter of Required Corrective Action 76 64 The Strategic Facilitation Process has been a critical element in Settlement without Publication - 1 the success of the CPA Vision Team’s planning efforts. “We have No Violation 65 74 found the process invaluable,” says Tom Hood, chair of the CPA Complaint Dismissed 25 41 Vision Team. “The lessons learned in this 3-day workshop will Investigation Discontinued 2 15 enable the AICPA and state societies to create and lead more effec­ Complied with Follow-up 31 45 tive organizations that support the changing needs of members.” Transfer/Return to State Society 3 Each workshop participant will receive a handbook filled with Automatic Termination 11 6 real-world examples of how the process has assisted other state No Jurisdiction __1 __3 societies and the National CPA Vision Team. This widespread col­ laborative effort will benefit the CPA profession and the members 273 296 of the participating organizations by providing opportunities for cost savings and better services. It will also eliminate redundan­ *Letters of required corrective action, settlement agreements and cies and create new venues for cooperation. trial board decisions usually require respondents to attend certain For more information on Grove Consultants or the Grove CPE courses and thereafter submit examples of their work prod­ Strategic Facilitation Process: ucts for ethics division review. At Dec. 31, 1999, and 1998, there were, respectively, 162 and 161 case investigations being moni­ tored for CPE attendance and follow-up review. 12 The CPA L etter • A pril 2000

AICPA Sends Tax Simplification Package to by the AICPA. The bill reinstates the installment method of accounting for accrual basis taxpayers. AICPA Key Persons have Congress in Joint Initiative with TEI, ABA Tax been writing and calling their House members to urge them to Section reverse the action Congress took late last year, which effectively The AICPA sent to Congress a package of tax simplification recom­ eliminated the use of the installment method of accounting for mendations it hammered out in a historic joint initiative with most accrual method taxpayers and which has had the unintended the Tax Executives Institute and the American Bar consequence of killing sales of small businesses. Also Association Section of Taxation. For the first time, the three included in the bill are the Institute’s proposals to modify groups joined together to propose how complex areas of the t a x the generation-skipping transfer tax and to allow employers nation’s Internal Revenue Code could be simplified. to offer retirement-planning services to their employees i n f o Among the recommendations released by the groups are without the cost of those services being taxable to the to: repeal the alternative minimum tax for individuals and employee. The bill also would allow the self-employed to corporations; streamline education tax incentives and capital gains fully deduct health insurance costs. The tax package is hooked to taxes; harmonize family-status definitions; establish an objective test the House’s bill to increase the minimum wage. Hurdles remain in for worker classification; eliminate or make uniform the numerous the Senate and at the White House before we can count on the phase-outs; establish a permanent safe harbor for the self-employed; House’s changes being signed into law. set up an objective, administrable test taxpayers can use to determine whether business costs are classified as business expenses or are Committee Application Process Extended capitalized; and untangle the foreign tax credit. Response from law­ If you are not currently serving on an AICPA committee and makers has been positive, and the AICPA will continue to press would like to, apply for the 2000-01 committee year by com­ Congress to simplify the tax code. The recommendations have been pleting online by Apr. 18 an assessment of your skills at posted to www.aicpa.org/members/div/tax/index.htm. www.skillscape.com/aicpaonline. If you are currently in your first or second year of committee service, online application is House Passes Tax Law Changes Sought by AICPA not necessary at this time. Members with questions may con­ tact Andrea Singletary at 212/596-6097 or David Ray at The House of Representatives on Mar. 9 passed a package of

212/596-6030. small business tax changes that includes tax law changes sought

DRS SRIE REQUESTED SERVICE ADDRESS

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Periodicals continued on page 8 on continued direct the creation and evolution the of portal. In fact, researchindicates clearly that if the profession does will. Interestingly, the to seize the opportunity so it can not develop this portal, someone else

Council will vote on the creation of the A A giant leap in delivering on the Global market research has found that Another significant item discussed by The designation, which would be a a positive vote by Council and completion Healtheon/WebMD portal may have heard manyabout was developed with­ of you out any involvement with physicians. of the economic model, thelaunch well before the portalend of the year. could ity and benefit of creating such a credential as a way to capitalize on market opportuni­ global business environments. and credibility as business professionals serving the public trust. vide central access to combined state soci­ ety and AICPA offerings, and foster com­ munity building and knowledge exchange. promise of the Vision, the profession needs to as the XYZ designation, a placeholder surveyed. Holders ofthe designation would portal at its meeting later this month. With Council members was new, the international concept businessof designation.a The AICPA and professional seven accoun­ tancy bodies from around the worldformed a have task force to explore the feasibil­ ties in today’s expanding domestic and optional, would complement the CPA cre­ dential. Further, it would provide with holdersnational and international recognition operating in Designees the global would have marketplace. to maintain the this proposed credential (currently referred highest ethical professional standards, pre­ name) has broad appeal in all countries ­ news update (The CPA Letter, Since the Oct. meeting, the The portal idea was in response to mem­ The portal would also be an active busi

Internet Portal, Broad-Based Global Credential Discussed at Regional at March regional Council meetings. skills and tools needed to make greater and state CPA societies would be able to Both of these subjects had been Oct. 1999 meeting ity of creating a powerful vertical portal and to the AICPA, as well as to the interna­ sonal interests. creation of a Web-based portal for the pro­ fession and those it serves, and investiga­ contributions to clients’ or employers’ suc­ cesses; operate more in the global environ­ ment; help drive marketshave an innovative, to creativeCPAs; and and forward- thinking organization to help them achieve these goals. Through the portal, the AICPA ing ing clients and employers with an Internet infrastructure for business and tools, purchasing content networks. As a result, the and potential business relationships, pro­ that could connect members to each other tional business community. A vertical por­ tal is a multi-function Web vides site information that pro­ and services forcific group a or spe­ industry, as well as for per­ points of discussion at Council’s Dec. Dec. 1999). Institute has been investigating the feasibil­ Council Meetings Two major AICPA strategic initiatives — tion of how best to compete in environment the — global were key topics discussed vices efficiently delivered.members would In be able addition, to customizeproducts the and services they want,them and when get and how real-time, theyon-demand fashion. want them in ness-to-business vehicle, giving members a competitive edge as they would be provid­ bers ’ bers’ desires to: obtain the knowledge, provide members with more targeted ser­ portal would strengthen members’ existing

Statements on

Vol. 80 No. Vol. 4 The CPA Letter CPA The Highlights Series Issued on Various Various on Issued 3 New Announces AICPA Technology Information Seeks CPA Profession’s Profession’s CPA Seeks Granted for Form 5500 5500 Form for Granted 7 on CD-ROM Auditing Standards Standards Auditing Exposure Issues Board SAS Omnibus ofDraft Executive Tax Exposes Committee 2 Draft Exposure Ethics Pronouncements Credential Federal Government Government Federal on War Global in Help Laundering Money Deadline Extension Extension Deadline Standards Independence Offered Services 6 4 4 Proposed 8 Standardsfor Tax May May 2000 to Members Report A News 201 201 3 Plaza AICPA AICPA CKRS

A merican Institute O f C ertified Public A c c o u n t a n t s Harborside Fin. Harborside Ctr. Fin. Jersey City, Jersey City, NJ 07311 2 2 The CPA L e t t e r • M ay 2 0 0 0

ABV Exam Review Sites Ethics Exposure Draft Issued on work and asks respondents for their views Announced Various Pronouncements through a series of questions. The ISB strongly encourages AICPA members with The fourth Accredited in Business An exposure draft containing pro­ an interest in the subject to read and Valuation Exam will be adminis­ n e w s posed revisions to the following respond to the DM. Comments are due tered on Monday, Nov. 6. Members ethics pronouncements has been May 31. may be interested in taking the issued for review and comment: To obtain a copy: review course in preparation for the briefs INTERPRETATION 101-11 exam. The course will be offered in UNDER RULE 101: Independence www.cpaindependence.org Atlanta; Boston; Raleigh, N.C.; and the Performance of Professional [email protected], for written Minneapolis; New York; Seattle; Dallas; Services Under the Statements on requests Bethesda, Md.; Chicago; Las Vegas; Los Standards for Attestation Engagements Angeles; and Columbus, Ohio. and Statement on Auditing Standards No. 212/596-6137, for written requests For review course information, a candi­ 75, Engagements to Apply Agreed-Upon date handbook and other related material Procedures to Specified Elements, regarding the exam, visit Accounts, or Items of a Financial The CPA Letter Supplements www.aicpa.org/members/div/mcs/abv.htm. Statement, RULING 100 UNDER RULE Available An ABV information kit is available 101: Actions Permitted When through the AICPA 24-Hour Fax Hotline Independence Is Impaired, RULING 108 To obtain any of the member-segment sup­ (dial 201/938-3787 from a fax machine UNDER RULE 101: Participation of plements produced this month with The and key in document numbers 492, 493 Member, Spouse or Dependent in CPA Letter. and 494). Applications for the exam are Retirement, Savings, or Similar Plan Dial 201/938-3787 from a fax due in-house by Aug. 31. Sponsored by, or That Invest in, Client; machine and key in document nos.: and INTERPRETATION 501-5 UNDER large firms, 1550; medium firms, 1551; Practice Alert on Guidance for RULE 501: Failure to Follow small firms, 1552; business and industry, Requirements of Government Bodies, 1553; internal audit, 1554; government, Independence Discussions Commissions, or Other Regulatory 1555; and education, 1556 Updated Agencies in Performing Attest or Similar www.aicpa.org/pubs/cpaltr/index.htm Practice Alert 1999-1, Guidance for Services (No. 800144CPA05). Comments Independence Discussions with Audit on this exposure draft are due June 15. A printed copy may be obtained from Committees, has been updated on the PUBLIC MEETING NOTICES AICPA’s Web site (www.aicpa.org/mem- the Member Satisfaction Center (see page bers/div/secps/index.htm). It provides 7; one copy is free). It also is available For detailed agendas, dial 201/938-3787 guidance on ISB Interpretation 00-1 that from: from a fax machine and key in document no. relates to the applicability of ISB www.aicpa.org/members/div/ethics 1206 two weeks prior to these meetings. Statement No. 1 to Secondary Auditors. /index.htm Accounting & Review Services Send Us Your E-Mail Address Committee: July 20-21, San Francisco; Independence Standards Board Aug. 17-18, Boston If you have not submitted your e-mail Issues Discussion Memorandum Accounting Standards Executive address to us or have changed it recently, on Conceptual Framework Committee: June 13-14, New York; July send your e-mail address to 25-26, Seattle [email protected] . Indicate “e-mail The Independence Standards Board has Auditing Standards Board: June 6-8, address update” in the subject header field issued a discussion memorandum, A New York to help us process the submissions more Conceptual Framework for Auditor efficiently. Be sure to include your full Independence. The DM is the first step in Professional Ethics Executive name, and, if known, your membership a process that will result in a concepts Committee: May 22-23, Puerto Rico number on the e-mail message. Be assured statement on auditor independence. It the AICPA will not sell your e-mail describes the issues that the ISB believes it Other Meetings address to outside third parties. should consider in a conceptual frame­ Council: May 21-23, Puerto Rico

The CPA Letter (ISSN 0094-792x) May 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L. Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] M ay 2000 • T he CPA L etter3

AICPA Announces New Information Technology Credential A new accreditation will soon be available ics, ranging from information technology based upon business experience, life-long to members. The Certified Information strategic planning to systems architecture to learning and examination. There are mini­ Technology Professional designation, pro­ systems auditing/internal control. mum requirements for both the business posed by the Information Technology experience and life-long learning areas, with Objectives of the Program Executive Committee, is the first one devel­ the examination being required for those who The CITP program has four objectives: oped under the auspices of the AICPA’s do not achieve sufficient points through expe­ • To achieve public recognition of the National Accreditation Commission. rience and life-long learning. CPA as the preferred IT professional in The accreditation will be granted to CITP candidates must earn a minimum the business community. CPAs involved in information technology of 15 points in business experience within • To promote members’ services through strategic planning, implementation, man­ the three-year period preceding the applica­ compilation of the CITP Expertise agement and business strategies. It is a tion date for certification and must com­ Database and the development of appro­ broad-based credential available to CPAs plete an online application that evaluates priate marketing materials. with a wide range of skill levels in all disci­ their technology-related experience. A max­ • To enhance the quality of IT services plines — a program for CPAs acting as the imum of 25 points will be awarded for each bridge between management and the tech­ that members provide. • To create economic benefits for AICPA year of 800 or more hours of experience. nologist of an organization. This role lever­ In the life-long learning area, candidates ages the CPA’s abilities as strategist and members in the form of greater fees for CPAs in public practice and enhanced must earn a minimum of 30 points within general business adviser. the three-year period preceding the applica­ As part of the market research conducted career progress for CPAs employed in business and industry, education, gov­ tion date for certification (with at least five to explore the feasibility of the CITP, focus points earned each year). groups were conducted with business execu­ ernment, and other areas. Individuals who do not have sufficient tives and IT professionals. These individuals To support designees’ efforts to distin­ points in business experience and life-long recognized the following skills as necessary guish themselves in the marketplace, they learning will be required to take a com­ for the CPA with the IT accreditation: cre­ will receive gratis membership to the puter-based examination. The examination ative thinking and vision; an understanding Institute’s Information Technology Section will test for professional competency in of project management; familiarity with IT and access to a Web-based CITP information technology core areas and will and business processes; competence in tech­ Information Center to further develop their consist of objective format questions, such nology; comprehensive business experience; technical skills, as well as a resource kit to as multiple-choice, fill-in-the-blank, true or ability to communicate clearly, appropriately help them boost their own efforts to market false, matching, labeling and sequencing. and thoroughly; industry specific knowledge the credential. Applications will be accepted beginning and experience; unbiased perspective; Requirements July 1 and the first examination is expected proven track record; and extensive and effec­ Granted only by the AICPA, the Certified tive interpersonal skills. to be available in Sept. for those members Information Technology Professional desig­ not meeting the required number of points. CPAs who earn the CITP designation nation will be awarded to individuals who can assist clients and employers with a Information kits will be available by e- meet the following requirements: mailing [email protected] after June 15. wide spectrum of information technology • Be a member in good standing. See this issue’s member-segment sup­ concerns depending upon their expertise. • Hold a valid and unrevoked CPA certifi­ plements and an upcoming issue of the These services include assistance in selec­ cate issued by a legally constituted state Journal of Accountancy for more details on tion and installation of computing hardware authority. this new accreditation program. and software, ongoing monitoring and • Payment of a $500 fee, which covers updating of systems, and advice on avail­ initial accreditation and materials. able upgrades in accordance with business Member Satisfaction Center • Submission of a written statement of • Address/membership information changes. Other IT services that may be pro­ intent to continue to comply with all the vided include data processing operational • Orders and inquiries requirements for reaccreditation and • Subscriptions and control review, accounting systems payment of an annual renewal fee. evaluation, IT assessment, IT training, • Conference registrations • Verification of at least 100 points under • Network licenses long-range information systems selection, a point system. and Web site design and development. 888/777-7077 To be as esteemed and credible as possi­ The Point System ble, the accreditation covers all of the main The centerpiece of the new IT accreditation is areas of work in which a professional with a “point system,” an innovative approach [email protected] specialized IT skills might be expected or designed to allow for flexibility of entry into Voice Mail Box comments, might wish to operate. The CITP accredita­ the program by both newer and seasoned 888/999-9252 tion therefore covers a wide variety of top­ CPA IT professionals. The point system is 4 The CPA L e t t e r • M ay 2000

Auditing Standards Board Issues Exposure Draft To obtain a copy of the proposal, visit www.aicpa.org. of Omnibus SAS Exposure Draft of Statement of Position on The Auditing Standards Board has issued an exposure draft titled Demutualizations Issued Omnibus Statement on Auditing Standards—2000. Comments are The AICPA’s Accounting Standards Executive Committee has due June 30. The proposed SAS: issued an exposure draft of a proposed statement of position, • Withdraws Statement on Auditing Standards No. 75, Accounting by Insurance Enterprises for Demutualizations and Engagements to Apply Agreed-Upon Procedures to Formations of Mutual Insurance Holding Companies Specified Elements, Accounts, or Items of a and for Certain Long-Duration Participating Financial Statement, to consolidate the guidance a ccounting Contracts (No. 800137CPA05). The exposure draft applicable to agreed-upon procedures engagements & auditing provides guidance on accounting by insurance enter­ in professional standards. The guidance currently in news prises for demutualizations and the formations of SAS No. 75 will be incorporated in Statement on mutual insurance holding companies. It also applies Standards for Attestation Engagements No. 4. to stock life insurance enterprises that apply SOP 95-1, • Amends AU section 543 to clarify the position of an auditor of Accounting for Certain Insurance Activities of Mutual Life an investee accounted for under the equity method. Insurance Enterprises, to account for participating policies that • Amends SAS No. 58, Reports on Audited Financial meet the criteria of paragraph 5 of SOP 95-1. A final SOP would Statements, to include a reference in the auditor’s report to the be effective for annual financial statements for years beginning country of origin of the accounting principles used to prepare after Dec. 15, 2000, although early adoption is encouraged. the financial statements and the auditing standards that the Comments are due June 5. auditor follows in performing the audit. Obtain a copy of the ED at www.aicpa.org/members/div/acct- • Amends SAS No. 84, Communications Between Predecessor and std/edo/demut3.htm. You may also request one free copy from the Successor Auditors, to clarify the definition of predecessor auditor. Member Satisfaction Center (see page 7).

AICPA Supports Changes to Service. We note that the IRS has worked professional conduct in a CPA’s tax prac­ diligently in the last year to provide the tice. In effect, the SRTPs, in and of them­ Corporate Tax Shelter Rules, but appropriate level of enforcement that will selves, have become de facto enforceable Cautions Congress to Protect encourage voluntary tax compliance—the standards of professional practice as tax “Main Street” Businesses cornerstone of our income tax system.” practitioners are regularly held account­ The testimony is available at able for failure to follow them, through The AICPA endorsed changes to the www.aicpa.org/belt/corptax.htm. state disciplinary organizations and mal­ nation’s corporate tax shelter rules practice cases when their professional at a recent hearing before the Senate t a x practice conduct fails to meet the pre­ Finance Committee, but cautioned Tax Executive Committee scribed guidelines of conduct defined in Congress that it must include pro­ i n f o Exposes Proposed the statements. tections for America’s “Main Street” Statements on Standards businesses in any new legislation. The Tax Executive Committee believes Although it is clear from the growing for Tax Services the Institute can best serve the public and number of court cases that the current sys­ On Apr. 18 the Tax Executive Committee members by adopting enforceable stan­ tem is working to identify and penalize exposed drafts of proposed Statements dards of conduct for tax practice. The those who cross the line, the Institute said, on Standards for Tax Services and an inter­ AICPA Board of Directors has agreed, and some change to the current rules govern­ pretation of Statement No. 1 (No. with board support, Council set the stage ing corporate tax shelters would help curb 800143CPA05). Comments are due for enforceable tax standards by designat­ abuses. July 18. ing the Tax Executive Committee as a Testifying about where it agreed and Between 1964 and 1977 the Tax standard-setting body in Oct. 1999. disagreed with the Department of the Executive Committee issued the For a copy of the exposure draft, visit Treasury’s budget proposals on corporate Statements on Responsibilities in Tax www.aicpa.org or contact the Member tax shelters, the Institute strongly dis­ Practice, which are advisory and educa­ Satisfaction Center (see page 7; one copy agreed with a recommendation that would tional in nature. The SRTPs established a is free). codify the so-called “economic sub­ body of advisory opinions providing The Tax Executive Committee will stance” doctrine. “Such an action would guidelines for CPAs in tax practice. consider comments received and vote to be a serious mistake,” the AICPA stated. These guidelines, as set forth in the finalize the exposure draft at a meeting in “Codification would invariably entrap SRTPs, have come to play a very impor­ New York on July 31. If approved, the millions of innocent ‘Main Street’ taxpay­ tant role. The courts, IRS, state accoun­ SSTSs are expected to be published in the ers. Instead, we believe the government’s tancy boards and other professional orga­ Oct. issue of the Journal of Accountancy ‘action plan’ should include enhanced nizations recognize and rely upon the and would become binding on members enforcement by the Internal Revenue SRTPs as the appropriate articulation of effective Oct. 31. M ay 2000 • T he CPA L e t t e r 5

It would lead to improved member ser­ attracts students strongly enough to vices by the Institute. It would also reduce ensure the talent needed for the profes­ administrative costs for both the AICPA sion’s future vigor. The XYZ credential (a and state CPA societies, increase the pro­ placeholder name) is designed as a rem­ fession’s unity by creating communities edy. It would be built on, and linked to, of interests and by knowledge sharing, what we’re doing now and have been and make all of us more effective service doing, as well as what we will be doing. providers, whether we’re in indus­ Market research in 11 countries vali­ try, government, academia or pub­ dates the demand for a credential that is lic practice. global and that signifies broad under­ The portal has major money-mak­ standing of business operations. Both cus­ chair'scornering potential. By enabling CPAs to tomers for these services and potential link small businesses with vendors, XYZ credential holders expressed a high enormous buying power would be har­ level of interest in such a credential. Our By Robert K. Elliott, CPA nessed — enough to create significant dis­ consultants advised us that the level of Chair, AICPA Board of Directors counts and efficiencies. The potential e- demand was so high, that if the world’s Two great opportunities were unveiled at purchases of small businesses that use or accountancy profession didn’t develop the regional Council meetings in March employ CPAs aggregate to $3.3 trillion such a credential, some other group — an accounting profession Internet por­ annually. The discounted prices would would. tal and a new, global credential available apply to all CPA-enabled purchases, The XYZ would be a global credential to CPAs and their equivalents in other whether the buyer is a client or an granted through national accountancy countries. Both proposals originate in employer. The resulting benefits would be bodies based on identical standards. It attempts to fulfill the Vision and both shared between the small-business cus­ would be valid everywhere. A consortium have been validated by research. tomers and the portal. The portal’s share of eight national bodies has been involved Council will vote on the portal at its would benefit the profession. Potential e- in developing the concept so far. The new meeting later this month. The new global purchases include many components of credential is not intended to change the credential would be submitted to member cost of sales as well as SG&A. current definition or regulation of the CPA ballot in 2001 if Council authorizes it at Our basic credential — the CPA — is and would be facilitated by adoption of its meeting this fall. excellent, conveying trust and integrity. the Uniform Accountancy Act in all juris­ Our portal — a multi-function Web site As a license to perform attestations, how­ dictions. — would bring together members, mem­ ever, it doesn’t cover all the high-opportu­ I’ll have more to say about these two ber services, customers and potential cus­ nity services the profession identified in great opportunities in later columns. tomers, and suppliers. It would provide an the Visioning Process, all the work our astounding array of professional and members currently do, or all their work [email protected] financial benefits. arrangements. In addition, it no longer

As a result of investigations of alleged violations of the Code of and 203 - Accounting Principles of the Code of Professional Professional Conduct of the AICPA and/or state CPA Conduct of the AICPA and the Michigan Association societies, the following ethics cases have been of CPAs (MACPA) in connection with his perfor­ resolved by settlement agreement under the Joint mance of professional services as senior vice president Ethics Enforcement Program: and chief financial officer of a publicly held company. • Howard W. Attwood, of Higginsville, Mo., settled disciplinary a c t io n s Without admitting or denying the charges, Mr. Stone charges on Mar. 3, 2000, of violating Rule 501 - agreed to a one-year suspension of his membership in Acts Discreditable of the Code of Professional Conduct of the the AICPA and the MACPA and to successfully complete 38 AICPA and the Missouri Society of CPAs (MSCPA) for his hours of specified CPE courses during the suspension period. guilty plea to charges of harassment. Without admitting or • Mary E. Erpelding of Santa Fe, N.M., settled charges on Mar. denying the charges, Mr. Attwood agreed to be expelled from 20, 2000, of violating Rules 201(B) - Due Professional Care, membership in the AICPA and the MSCPA. 202 - Compliance with Standards and 203 - Accounting • Mark Brian Dilworth of Austin, Texas, settled charges on Mar. Principles of the Code of Professional Conduct of the AICPA 6, 2000, of violating AICPA Bylaw 7.4.6 by failing to comply in connection with her audit of the financial statements of a with the directives of a Sept. 30, 1997, settlement agreement. not-for-profit organization. Without admitting or denying the Without admitting or denying the charges, Mr. Dilworth agreed charges, Ms. Erpelding agreed to a two-year suspension of her to be expelled from membership in the AICPA. membership in the AICPA, to successfully complete 8 hours of • Jerry E. Stone of Mt. Crested Butte, Colo., settled charges on specified CPE courses during the suspension period and to Mar. 17, 2000, of violating Rules 102 - Integrity and Objectivity continued on page 6 6 T6 he CPA L etter • M ay 2000

HUD Issues Electronic Submission 30, 2000). No auditor involvement is neces­ annually. It serves to identify existing com­ Guidelines for Public Housing sary for this unaudited submission. A final pliance requirements that the federal gov­ Authorities FDS based on audited financial statements ernment expects to be considered as part of The U.S. Department of must be electronically sub­ an audit in accordance with the Single Housing and Urban mitted by the PHA within the Audit Act and OMB Circular A-133, Audits Development Uniform regulatory earlier of 30 days after receipt of States, Local Governments, and Non- Financial Reporting Standards of the auditor’s report or 9 Profit Organizations. An electronic copy of for HUD Housing Programs matters months after a PHA’s fiscal the Supplement is available on the OMB Web site at www.whitehouse.gov/OMB/grants. (The CPA Letter, Nov. 1998) year end. A printed copy can be purchased from the require, among other things, public housing A copy of the Guideline can be obtained Government Printing Office at authority (PHA) project owners of HUD- from the REAC Web site at 202/512-1800 (stock number 041-001- assisted housing to submit financial infor­ www.hud.gov/reac/pdf/fass_ph_guideufrs.p 00544-7). mation electronically to HUD via a tem­ df. Further, HUD plans to hold a satellite plate known as the Financial Data Schedule broadcast in late May to help PHAs, as well Deadline Extension Granted for Form (FDS). In Feb., the HUD Real Estate as their auditors, better understand the PHA 5500 Series Assessment Center (REAC) issued a docu­ electronic submission guidelines. The U.S. Department of Labor’s Pension ment titled, Guidelines for Public Housing Additional information on the broadcast and Welfare Benefits Administration has Authorities and Independent Auditors, that and the other activities of REAC is avail­ announced a two and one-half month exten­ provides guidance on the detailed require­ able on the REAC Web site at sion of the deadline for filing 1999 Form ments for PHA electronic submission and www.hud.gov/reac. Further assistance on 5500 Series returns/reports under the new the auditor’s involvement in the process. the PHA electronic submission require­ ERISA Filing Acceptance System (The The AICPA provided input into the ments is also available by contacting the CPA Letter, Apr.). EFAST filers have been Guideline as HUD developed it, particu­ REAC Customer Service Center at granted this automatic extension and do not larly on the auditor report templates. need to file Form 5558. Be apprised that the 888/245-4860. PHA electronic FDS submission new filing deadline cannot be extended fur­ requirements became effective for fiscal OMB Issues 2000 Update to ther by filing a Form 5558. Also, filers years ending on or after Sept. 30, 1999. A Compliance Supplement whose normal due date is after July 31, and PHA must submit its preliminary FDS elec­ Auditors who perform audits of federal who are otherwise eligible to use the Form tronically within two months after its fiscal awards should be aware that the U.S. Office 5558, must still timely file the Form 5558 year end based on unaudited information of Management and Budget has issued the to secure a two and one-half month exten­ (although HUD has granted an automatic 2000 update to the OMB Circular A-133 sion. For more information, check the one-month extension for PHAs with fiscal Compliance Supplement. The Supplement EFAST Web site at www.efast.dol.gov or years ending Sept. 30, 1999, through June was first issued in June 1997 and is updated call 202/219-8770. continued from page 5 — Disciplinary Actions submit written attestations regarding whether she has per­ commit money laundering. formed or plans to perform any audit, review or compilation • Stephen Robin of Northbrook, Ill., effective Mar. 22, 2000, fol­ (with footnote disclosures) engagements. Should she state that lowing the denial by an ad hoc committee of the Joint Trial she has performed or plans to perform any such engagements, Board that the automatic disciplinary action not apply to his she would be required to complete an additional 78 hours of circumstance, in connection with his guilty plea of attempting specified CPE courses and to undergo a preissuance review of to evade/defeat taxes. such engagements during the suspension period. —Suspended following suspension of his CPA certificate by his The following member was suspended for a six-month period, state board of accountancy: following denial by an ad hoc committee of the Joint Trial Board • Bruce T. Diettert of Missoula, Mont., effective Jan. 12, 2000, for a review of a trial board decision: coincident with the duration of the suspension period imposed . Thomas R. Mathews of Fairfield, Ohio, effective Mar. 22, by the Montana State Board of Accountancy, in connection 2000, for violating the AICPA’s Code of Professional Conduct with misappropriation of funds from his employer. Rule 501 - Acts Discreditable by failing to timely file his indi­ vidual tax returns for the years 1987 through 1991. Under the automatic disciplinary provisions of the Institute’s Retraction bylaws, the following members have had their memberships: The Apr. issue of The CPA Letter reported that the membership of — Terminated because of final judgments of conviction for crimes Reginald Hudson of Fairfax, Va., was automatically terminated punishable by imprisonment for more than one year: from the AICPA for the conviction of a crime. That report was in • Anthony F. Aliotta of Long Branch, N.J., effective Feb. 10, error. Mr. Hudson is and remains a member of the AICPA in good 2000, for his conviction of money laundering and conspiracy to standing. M ay 2 0 0 0 • T he CPA L e t t e r 7

CD-ROM on Independence Standards Offered Strategic E-Business Forum Being Held A CPE course on independence (No. 739035CPA05) is being The AICPA’s Strategic E-Business Forum is designed to help CPAs developed that will review the AICPA authoritative literature fully understand how to provide e-business consulting for their covering independence standards and include the newly issued clients. It will also teach firms how to update their practices with SECPS independence requirements, SEC rules on inde­ emerging technologies. This forum will be held July 10-11 pendence and Independence Standards Board rules. in Chicago. For a brochure (No. G50099CPA05), contact the The course is a six-hour, interactive CD-ROM program CPE Member Satisfaction Center (see below) or visit that was developed using contemporary design principles www.aicpa.org/calendar/bydate.htm. Recommended CPE and techniques and includes complete learning objectives news credit: 16 hours. Registration fee: $995 member, $1,195 with the opportunity for testing and mastery activities to non-member. Register by June 10 and save $50 — plus measure learning. receive Chuck Martin’s NET FUTURE: The 7 Cyber Trends that Included in the reference section of this program are: AICPA Will Drive Your Business, Create Wealth and Define Your Future. Rule 101 and related interpretations 01 through 14; ethics rul­ ings on Independence, Integrity, and Objectivity, as applicable Self-Study Online Learning Library Coming This Summer (ET 191); SEC Rule 2-01, “Qualifications of Accountants”; SEC To provide a timely, convenient resource that will help members Section 601 and 602 of the Codification of Financial Reporting improve their careers, business or practice — while fulfilling CPE Policies; SECPS Independence Quality Controls; and ISB requirements — the AICPA is creating an online learning library. Standards Nos. 1 and 2. Availability: May. Level: Basic. The library will consist of one- and two-hour modules, totaling Recommended CPE credit hours: 6. Price: $89 member, $109 1,200 hours of training and resources. Members will pay just $95 non-member. Order from the Member Satisfaction Center for total access to all of the library’s products. Watch for this new (see below). learning vehicle coming this summer.

Accountant’s Business Manual with New questions, organize the facts, locate and FPLAN Professional Advisor+ (No. CD-ROM Toolkit (No. 029418CPA05). assess pertinent authority, and clearly com­ 016570hsCPA05). Use this versatile per­ This newly updated two-volume set is a municate research findings. To help you sonal financial planning software tool to proven reference tool that thousands of pro­ keep competitive, the newly revised guide generate quick calculations and easy-to- fessionals in public practice reveals faster, easier ways to understand reports for your clients. and industry depend on for get more of the research you Calculations and reports can be customized immediate advice in answering now need to become a better con­ for budgeting, net worth, economic a wide array of inquiries. Gain sultant and adviser to your assumptions, education funding, retirement invaluable guidance on hot top­ available clients. Price: $45 member, analysis, life insurance needs, estate analy­ ics like e-business - opportuni­ $56.50 non-member. sis, asset allocation and long-term care. ties, features, costs, management and more; Price: $295 member, $395 non-member. planning for college financial aid; analysis Audits of Employee Benefit Plans Audit & and decision-making for obtaining financ­ Accounting Guide (No. 012340CPA05). TValue Software (No. 016544hsCPA05) ing; analysis of the new approaches for Throughout this new edition, you will find performs interest calculations quickly and cash balance plans and “GUST” definitive guidance on successful solutions easily. The program calculates payment Amendments 2000; the latest IRS ruling for to the unique problems of auditing and amounts, yields, lease and loan terms, bal­ S corporations; and much more. Receive reporting on financial statements for all loon payoff amounts, present and future the new companion CD-ROM Toolkit fea­ kinds of employee benefit plans. It provides values, remaining balances and more - turing ready-to-use forms, checklists, sam­ easy-to-follow instructions on how to pre­ instantly and accurately. Print comprehen­ ple agreements, policy templates, and pare, audit and report on financial state­ sive amortization schedules that can be spreadsheets. Includes standing order ments of employee benefit plans. Included exported for use with spreadsheet and word option on semiannual updates. Price: is new guidance on cash balance plans and processing programs. Price: $99 member, $172.50 member, $189.75 non-member. auditing multiemployer plans; the newly $149 non-member. streamlined Form 5500 Series; Statements Tax Research Techniques (No. of Position 99-2, Accounting for and To order, write: AICPA Member 061069CPA05). For almost 25 years, CPAs Reporting of Post-retirement Medical Satisfaction Team, CPA05, P.O. Box have relied on the AICPA’s popular Tax Benefit [401(h)] Features of Defined Benefit 2209, Jersey City, NJ 07303-2209; Research Techniques to make their prac­ Pension Plans, and 99-3, Accounting for fax, 800/362-5066; call 888/777-7077 tices more efficient and productive. Now and Reporting of Certain Defined (8:30 a.m. to 7:00 p.m., ET); or e-mail the newly revised Fifth Edition has been Contribution Plan Investments and Other [email protected]. Prices do not fully updated to include comprehensive Disclosure Matters; and new statements on include shipping and handling. guidance on Web-based tax research tech­ auditing standards. Price: $39.95 member, Have membership number ready. niques. It shows you how to ask the right $49.95 non-member. Available: May 15. 8 The CPA L e t t e r • M ay 2000

Federal Government Seeks CPA Profession’s Help in Global tion and deterrence of money laundering. By Sept. the Director of War on Money Laundering Treasury’s Financial Crimes Enforcement Network intends to A federal government report issued in Mar. sheds light on how fed­ report on the progress to develop further approaches to money laun­ eral agencies fighting money laundering see CPAs as one day help­ dering that can be integrated into the work of both internal and ing them prevent criminals from converting illicit gains into cash or external accounting professionals. The study group also plans to goods that can be used legitimately. The National Money review the professional responsibilities of lawyers and accountants Laundering Strategy for 2000 (www.treas.gov) outlines a broad with regard to money laundering and make recommendations — government campaign, coordinated with other nations, to fight ranging from enhanced professional education, standards or rules to money laundering. The Justice and Treasury Departments jointly legislation — as might be needed. issued the strategy report, the second of five annual reports required Also in Mar., a House bill, the “International Counter-Money by Congress, to present the federal government’s plan and current Laundering Act of 2000,” was introduced containing provisions assessment of the fight against global money laundering. affecting independent auditors (e.g., safe harbor for those who report The strategy calls for a study group, consisting of the Justice and suspicious activity to the authorities and a prohibition against Treasury Departments, the Internal Revenue Service, the Securities informing suspects that their activities have been reported). and Exchange Commission, the Commodities Futures Trading However, the bill does not explicitly require independent auditors to Commission and the Federal Deposit Insurance Corporation, to report suspicious activities. The AICPA is analyzing the bill’s provi­ examine how best to utilize accountants and auditors in the detec­ sions. Look to future newsletters for continued reports. continued from page 1 — Internet Portal, Global Designation win enhanced market position as multi-disciplinary business rize a vote by the membership on this initiative in early 2001. advisers and strategic thinkers. See this month’s “Chair’s Comer” (page 5) for other informa­ Over the coming months, members will have opportunities to tion and stay tuned to The CPA Letter for much more on these express themselves and participate in the process to help ensure major developments. that this far-reaching milestone is most advantageous for the CPA

For portal inquiries: John Hudson, [email protected] profession. It is anticipated that Council will be asked to autho­

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Postage Paid at at Paid Postage Periodicals Periodicals a membership ballot next year) and copyright laws, all Council members discussion on the designation’s bene­ fits, strategies for adoption (subject to other issues. The AICPA will use this participated in three hours ofbreakout separate IT firm membership section. a small amount. Approved the integration Approved of resolutions the members allowing public on the Professional Ethics the bylaw change to permit this action). get, which provides for a dues increase of as president ofthe Les TurnerALS (“Lou Gehrig disease”) Foundation since its for­ and patient care. In other actions at its meeting, Council: new global business professional designa­ tion. After a detailed presentation on currentthe status and international on thinkingXYZ, which would be maintainedthe privatein sector through international feedback as it moves international forward partners to establishwith this cre­ the dential. and securities matters. of the FASB and professoraccounting emeritus of at the University of Information Technology Alliance as a Executive Committee and theExaminers Board of (members voted in favor of Approved the Institute’s 2000-2001 bud­ Presented the AICPAAward to Harvey Public Gaffen who has served Service mation more than 20 years helped agoraise over $12 and million hasfor research Was updated on “XYZ,” the proposed Awarded the AICPA Medal of HonorA.A. to Sommer Jr., formerly Publicchair Oversight ofBoard, the for his extensive involvement with accounting, corporate Presented the AchievementAICPA in Distinguished AccountingAward to EducationGerhard G. Mueller, a member Washington. ju s t in...

“These “These e-enablement capabilities will help Five investors were identified at the meet­ Members will start to see some of the The portal will be established Internet Portal strategic partners. strategic success, success, we initially will be using pilot firms approved the creationsociety of small businessan AICPA/state Internet portal. After “cpa2biz,” the proposed name of the portal, Services for small businesses will be devel­ shared services corporation to provide a sin­ and products to serve the CPA profession. to test the servicesoffered being to developedmake certain and they are market ers would include AICPA and state society CPA-targeted services available by late July. oped throughout the remaining part of this tion for small businesses,” said AICPA through the creation of a new for-CPA societies will cooperate throughgle point ofentry forcomprehensive services a Outside strategic forcespartners to provide wille-enablement alsothatcapabilities CPAs can join deliver to their small business clients and employers. By a virtually unanimous vote, ing the govern­ Council at its May 21-23 meeting the Council agreed that the multi-function erwise be unrealized. responsive responsive and help position the success­ CPA ine-commerce the fully business.” phase of ing: Thomson Corporation, Microsoft, AON, Intelysis and ADP. Additional investors will mately will be a public company whose own­ members, the AICPA, state societies and the year. Watch this newsletter for mationmore infor­on the portal as itcoming weeksunfolds and months. over the position the CPA as a key e-commerce solu­ President & CEO Barry Melancon. ensure "To profit entity. The AICPA and state Web site would offer CPAs many new business opportunities that would oth­ reviewing the business overview for be brought together in the future in what ulti­

Council Overwhelmingly Approves New CPA Letter CPA

Vol. 80No. Vol. 5 CPA CPA WebTrustsm Highlights State CPA Societies 7 CPA AccessoriesCPA Collection Merchandise OrderForm 7 Supportthe Profession’s Statements ofConduct and Bylaw Changes 5 CPA VisionCPA Process Receives National 8 Highlights ofApril Board 8 Affinity Partner 4 Members Pass All Code 3 New Modularized 2 ofDirectors’ Meeting Working with National Vision Team on Portal, XYZ Designation AdvisorSquare Provides FinancialWeb Sites PAC; ContributionsPAC; Can Be MadeThrough Dues Approach, New B2B Principles and Criteria for Acclaim A News Report to Members June 2000

A merican Institute O f C ertified Public A c c o u n t a n t s 2 The CPA Letter • June 2000

CPA Vision Process Receives Conference on Internal Revenue Service sory compliance requirements as well as National Acclaim Modernization. The conference was cre­ the facts to make a well-informed decision ated in a cooperative effort between on expanding the scope of their practices Prestigious national organizations the IRS and practitioner commu­ to include advisory services. Locations recently have recognized the CPA nity to serve as a forum for the and dates: New York City (June 27), news Vision Process for its forward-look­ open discussion of the implications Chicago (July 18), Boston (Aug. 23), ing approach and dynamic commu­ both inside and outside the Service Dallas (Sept. 21), San Diego (Oct. 5) and nications style. Here are the awards briefs of the IRS’s reorganization. The Miami (Oct. 17). Discounted AICPA it has received for excellence in Commissioner’s Award is the high­ member fee: $421, workbook included. multimedia and print competitions: est award the IRS Commissioner can For more information or to receive the Gold Quill Awards. The CPA Vision bestow. full agenda and registration packet, contact Project won a Gold Quill Award from the Renee Betar at 860/435-2541, ext. 885, or International Association of Business “CPA” Logo Golf Balls, Shirts or e-mail [email protected]. Information Communicators. For more than 25 years, is also available at www.nrs-inc.com and the IABC’s Gold Quill Award program has Help Promote the Profession http://investmentadvisory.aicpa.org. been the hallmark of excellence in busi­ Members’ use of the “CPA” logo on busi­ ness communication. The award reflects ness and promotional material, including the success of the entire Vision communi­ letterhead, envelopes, business cards, Volunteers Needed to Pretest cations program — from planning to brochures, newsletters and other items, Self-Study Courses research and execution to results. increases the visibility of the profession’s The AICPA is looking for volunteers to Communicator Awards. The CPA designation and reinforces the messages of pretest self-study CPE courses. After com­ Vision campaign won a Crystal Award of the national image-enhancement cam­ pleting a course, volunteers must complete Excellence in the Organizational/Corporate paign. Among the gifts and giveaways an associated product review form, which Image Category of The Communicator available featuring the profession’s logo should take about an hour beyond the time Awards, and the “CPA Vision Final Report” and/or tagline are Spalding TopFLite XL spent for the course itself. Participants, won a Communicator Award of Distinction golf balls and golf shirts, and tee shirts — who will receive free CPE credits for com­ for Excellence in Writing. Entries are popular summer items. Delivery is made pleting the course, are needed in all prac­ judged by a panel of professionals who within four weeks of receipt of an order. tice areas. If interested, contact Freddia look for companies and individuals whose To purchase the golf balls, shirts or other Shaw: talent exceeds a high standard of excellence logo products, use the CPA Accessories and whose work serves as a benchmark for Collection order form that appears on page 5 [email protected] the industry. of this newsletter (the form may be photo­ Videographer Awards. The CPA Vision copied). The form also is available from “Futurist” video won an Award of www.aicpa.org/store/biggame.htm. Please be PUBLIC MEETING NOTICES Excellence, and the “CPA Image” television advised that Big Game Outfitters does not commercial won an Honorable Mention in For detailed agendas, dial 201/938-3787 have copies of the merchandise order form. the Videographer Awards. The Videographer from a fax machine and key in document Awards helps to set the standard for the no. 1206 two weeks prior to these meetings. video production industry. Awards are given One Day Investment Adviser Accounting & Review Services to those entries that were written, produced Seminars Offered Committee: July 20-21, San Francisco; and shot in an exceptional manner. Aug. 17-18, Boston CPAs offering or wishing to offer invest­ Accounting Standards Executive ment advisory services soon can get vital AICPA Receives IRS Committee: July 25-26, Seattle guidance from seminars hosted by Auditing Standards Board: July 18-19, Commissioner’s Award National Regulatory Services, the nation’s New York The AICPA received the Commissioner’s leader in financial services registration and Tax Executive Committee: July 31, New Award from IRS Commissioner Charles compliance consulting and a partner in the York O. Rossotti in recognition of the Institute’s AICPA’s Center for Investment Advisory contributions and commitment to the suc­ Services. Participants will take away a Other Meetings cess of the January 2000 National clear understanding of investment advi­ Peer Review Board: Aug. 7-9, Denver

The CPA Letter (ISSN 0094-792x) June 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] J u n e 2000 • T he CPA L e t t e r 3

New Modularized Approach, New B2B Principles and Criteria for CPA WebTrustsm The WebTrust Principles and Criteria are Concurrent with this redesign of the Providers will be able to utilize this mod­ intended to address user needs and con­ WebTrust model is the addition of ular method. It will not apply to the cerns and are designed to benefit users Principles and Criteria designed to meet WebTrust Principles and Criteria for and providers of electronic the needs of the business-to- Certification Authorities due to the nature commerce services. To allow business marketplace. The of that business, and therefore that model the WebTrust product to bet­ assurance modularized principles will will remain as a separate model under the ter adapt to market needs, the services include principles covering WebTrust family of products. WebTrust Principles and business practices and trans­ The final product of this new model is Criteria are going to be re­ action integrity, security, pri­ expected to be released in the fall. A exposed late this summer in a modular­ vacy, confidentiality, non-repudiation, future issue of The CPA Letter will ized format. This revised approach will availability, and customized disclosures include more information on the princi­ allow clients to pick the WebTrust product (in conjunction with another principle). ples and what each principle represents. they want by choosing from a “cafeteria Advantages of this approach include the In the interim, individuals with questions selection” of Principles. They may select ability to lower costs when the site only should contact Sheryl Weiner, WebTrust the WebTrust Principle(s) most relevant to needs to meet one standard (e.g., privacy), Team Leader: their Web site business and request that making WebTrust more flexible and able the CPA report only on these. A click on to efficiently address changes in the mar­ 201/938-3751 the WebTrust seal will reveal which prin­ ket and technology. ciples were independently verified by the Business-to-business sites, business-to- [email protected] CPA in a particular engagement. consumer sites and Internet Service Workshop Offered to Learn About Performance Measures Consulting CPA Performance View PLUS, a three-day training workshop get a systems-oriented approach and accompanying tools for developed by the AICPA and Mentor Plus, helps members dis­ delivering performance measures consulting services. The pro­ cover how they can add value to their clients and create new gram also offers training on selling and marketing this service. revenue streams for their firms. When attending the training The workshop is being offered July 10-12 in Chicago; program, CPAs will receive technical instruction on how to Sept. 18-20 in Tempe, Ariz.; and Oct. 25-27 in Lake Buena develop and deliver business performance measures consulting Vista, Fla. For more information or to register, call services, including in-depth case study work to provide a com­ 888/777-7077, visit www.aicpa.org/performance or e-mail prehensive understanding of the subject. Participants also will [email protected].

Under the automatic disciplinary provi­ • Paul H. Tompkins of Webster, Texas, returns for the years 1992 through sions of the Institute’s bylaws, the follow­ effective Mar. 22, 2000, for violating 1994. Without admitting or denying ing member has had his the AICPA’s Code of the charges, Mr. Davies agreed to a membership: Professional Conduct Rule six-month suspension of his member­ — Suspended following sus­ 501 - Acts Discreditable by ship in the AICPA and to pass the pension of his CPA certifi­ Disciplinary failing to comply with the AICPA ethics course with a grade of cate by his state board of actions Jan. 27, 1994, directives of a 90 or better. accountancy: previous trial board panel. • John Basalyga of Clifton, N.J., effec­ tive Mar. 1, 2000, coincident with the As a result of an investigation of alleged Editor’s Note: Beginning with the duration of the suspension period violations of the Code of Professional July/Aug. issue of The CPA Letter, the imposed by the New Jersey State Conduct of the AICPA, the following Disciplinary Actions section will be Board of Accountancy, for his failure ethics case was resolved by settlement presented in a new, abbreviated format to cooperate with a board inquiry and agreement under the Joint Ethics with additional details on each action to comply with board directives. Enforcement Program: available through the Web site version • Preston S. Davies of Northbrook, Ill., of The CPA Letter. This new version is Following denial by an ad hoc committee settled charges on Apr. 24, 2000, of in response to several readership sur­ of the Joint Trial Board of a request for violating Rule 501 — Acts veys and the expanding communica­ review of a decision of the original trial Discreditable of the AICPA’s Code of tions needs of the Institute and its mem­ board, the following member has had his Professional Conduct by failing to bers. AICPA membership terminated: timely file his personal income tax 4 4 The CPA L e t t e r • J u n e 2000

decision makers, and in leveraging question before us is how to build on our knowledge to trigger wealth creation. CPA tradition to make clear our claims to Market research in eleven countries serve in a growing information-era market­ showed demand for a global credential place. In all sorts of ways we help individu­ signifying a broad understanding of als and organizations achieve their objec­ c hair's business operations. Potential cus­ tives by knowledge, and we have widened tomers and credential holders the range of ways in which we do it. We corner expressed a high level of interest. need a credential that captures the range of Work on the credential continues. A our services and how they will evolve. finished product is expected to be The core of the “XYZ” definition will brought to Council in the Fall and, if overlap with the skills and services of Council assents, to ballot by the entire other professions, just as many of our ser­ membership. As the process continues, vices and skills overlap now with those of By Robert K. Elliott, CPA members will have the opportunity to pro­ other professions. A lawyer who is an Chair, AICPA Board of Directors vide feedback and guidance. expert in leveraging knowledge to achieve Why complement the CPA with a The “XYZ” is a placeholder name for a organizational objectives shares expertise new credential that builds on the CPA but broader credential? First, because the CPA credential is basically a license to do with a CPA and would share expertise is both broader and international. As I attest work, and CPAs do much more than even more directly with an “XYZ.” For explained in my last Chair’s Comer, the that. The licensing rationale limits the that reason, members of any other profes­ AICPA has been working with organiza­ message conveyed by our “brand” and sion who could pass the rigorous entry tions in seven other countries to develop therefore our market permissions. requirements and become an “XYZ” the idea. AICPA members are aware of these would be free to do so. The “XYZ” credential wouldn’t limits. The Vision Process, which involved The new credential would establish a change the current hallmarks of the CPA a huge sample of our members, defined convergence between the evolution of our or regulation of CPAs. Instead, the new services and stated who we are in ways membership’s livelihoods, the way the credential would be an option for us. It that go well beyond the scope implied by marketplace is changing, and our brand­ would be the same in all participating the license. In breakout sessions at the ing. The global information era opens countries, based on a set of competencies Oct. 1999 meeting of Council, members enormous potential for growth. We should that extends the ones that CPAs have expressed concerns about our credential’s do what’s necessary to help CPAs realize been developing through their practices appeal to talented undergraduates and the opportunities. over the years. Examples of such compe­ voiced the idea of a new credential. tencies include skills in business mea­ Second, the new credential can help [email protected] surement, in deploying information for adapt us to the changing economy. The

Members Pass All Code of Conduct and Bylaw Changes All proposals members were asked to vote on (The CPA Letter, • More than 90% were in favor of the proposal to allow Council Dec. 1999) to amend the bylaws passed overwhelmingly. The to authorize non-CPAs to serve on any “senior” or permanent balloting period ended on May 15. A two-thirds affirmative vote committee or board (up to a maximum of 25% being non- of all those voting is required to pass any proposal. The propos­ CPAs). AICPA leadership asked Council at its May meeting to als passed with substantial margins, ranging from 89% to 98% approve adding non-CPA members to the Professional Ethics of the vote. Executive Committee and to the Board of Examiners (see Of particular note: page 1). • More than 91% of members responding voted “yes” on More than 96% of members favored bylaw changes to the proposal to require individual CPAs who practice in news modernize, clarify and harmonize provisions in the firms that are not eligible to enroll in the peer-review bylaws and Code of Professional Conduct. program to enroll individually in a peer-review pro­ update More than 89% of those voting approved the proposal gram, if authorized by Council. Thus, individual AICPA that communications and notices can be provided members who compile financial statements are now eligible to electronically or by other means if authorized by enroll in an Institute-approved practice-monitoring program if Council. they perform compilation services in firms or organizations The AICPA bylaws and Code currently are being revised to that are not eligible to enroll in such a program. reflect these changes. CPA Accessories Collection

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CPA Order Form Big Game Outfitters Item Description Item Number/Size Quantity Total Price 776 Bay Road Hamilton, MA 01982 Tel. (978) 468-9759 Fax (978) 468-9758 E-mail: [email protected] (inquiries only) Ship To: Name Firm or Organization Street Address* Total Amount City State Zip *Shipping Charges Phone Paid By: **5% MA only Sales Tax *No P.O. Box, please. (not on food or clothes) □ Check □ Money Order Grand Total Shipping & Handling Charges These charges are in addition to the final sale price of the ordered items. □ MasterCard □ Visa

Order Amount S&H Charges Order Amount S&H Charges charge card number Up to $5.00 $3.67 $60.01-$80 $9.75 exp. date * Shipping charges order amount $5.01-$20 $4.75 $80.01-$100 $10.75 Please Complete: ** Sales Tax: Only on non-clothing/ $20.01-$40 $5.75 $15.75 AICPA Membership Number $100.01- $250 non-food items with MA as the $40.01-$60 $7.75 Over $250 7% of order delivery destination Make check payable to Big Allow 4 weeks for delivery Overseas please add $10 UPS Ground Trac Delivery Signature Game Outfitters 6 The CPA Letter • June 2000

2000 AICPA Audit and Accounting 011923CPA06). State and Local Life and Health Insurance Entities — Guides summarize applicable practices Governmental Units (No. 012061CPA06). Audit and Accounting Guide (No. and deliver “how-to” advice for handling 012500CPA06) will help CPAs in life almost every type of financial statement. Audits of Investment Companies — and health insurance entities prepare Each guide describes relevant matters, Audit and Accounting Guide (Revised) financial statements in conformity with conditions and procedures for a particular (No. 012364CPA06) will help CPAs in GAAP, and assist independent auditors in industry. They also illustrate investment companies pre­ performing efficient and effective audits treatments of financial state­ pare financial statements in on those financial statements. It incorpo­ ments and reports to caution now conformity with GAAP, and rates all current and relevant technical auditors and accountants assist independent auditors guidance and provides new illustrative about unusual problems. available in performing efficient and financial statements, disclosures and Price each: $39.95 member; effective audits on those audit reports. The guide supersedes the $49.95 non-member. financial statements. Covering those AICPA Industry Audit Guide Audits of Agricultural Producers and aspects of accounting and auditing Stock Life Insurance Companies, which Cooperatives (No. 012355CPA06). unique to investment companies, the was issued in 1972 and updated only for Airlines (No. 013184CPA06). Banks and guide provides new guidance on account­ conforming changes. Available July 31, a Savings Institutions (No. 012468CPA06). ing for offering costs, amortization of special pre-publication 20% discount Brokers and Dealers in Securities (No. premium or discount bonds, liabilities for price is offered: $31.95 member; $39.95 012182CPA06). Casinos (No. excess expense plans, reporting complex non-member. 013151CPA06). Common Interest Realty capital structures, payments by affiliates, Associations (No. 012489CPA06). financial statement presentation and dis­ 2000 AICPA Audit Risk Alerts. These Construction Contractors (No. closures for investment companies and alerts complement the guidance provided 012097CPA06). Credit Unions (No. nonpublic investment partnerships. in many of the Audit and Accounting 012469CPA06). Employee Benefit Plans The guide will be effective for fiscal Guides by describing current economic, (No. 012340CPA06). Oil and Gas years beginning after Dec. 15, 2000. It regulatory and professional developments Producing Entities (No. 012107CPA06). replaces the current AICPA Audit & that can have a significant impact Federal Government Contractors (No. Accounting Guide Audits o f Investment on engagements performed. Price 012439CPA06). Finance Companies (No. Companies, which was issued in 1987 each: $14.95 member; $20.95 non-mem­ 012467CPA06). Health Care and updated only for conforming ber. Employee Benefit Plans Organizations (No. 012441CPA06). Not- changes. Available July 31, a special pre­ (No. 022245CPA06). Not-for-Profit for-Profit Organizations (No. publication 20% discount price is Organizations (No. 022246CPA06). 013393CPA06). Property and Liability offered: $31.95 member; $39.95 non­ State and Local Governments (No. Insurance Companies (No. member. 022251CPA06).

Assurance Services Update (2000 Edition) (Videocourse-No. ber; Videocourse $202 member, $253 non-member; Additional 180580CPA06; Additional Manual-No. 350580CPA06). This Manual $60 member, $75 non-member. course helps CPA firms exploit the wide range of new opportuni­ ties in assurance services: CPA WebTrust, CPA Performance Real Estate Accounting and Auditing (Text-No. 730598CPA06; View, SysTrust, CPA ElderCare, and the new Risk Services Task Videocourse-No.: 187035CPA06; Additional Manual-No. Force. Course Level: Update. Recommended CPE credit: 8 hours. 357035CPA06) provides an in-depth study of the unique require­ Price: Videocourse $129 member, $161 non-member; Additional ments that apply at each stage of the real estate life cycle. It gives Manual $40 member, $50 non-member. practical, how-to-do-it coverage of accounting considerations related to the development, ownership and operation of Construction Contractors: Accounting, Auditing and real estate assets. Course Level: Basic. Recommended Tax (Text-No. 736422CPA06; Videocourse-No. CPE CPE credit: Text-10 hours; Videocourse-11 hours. Price: 186316CPA06; Additional Manual-No. 356316CPA06). Text $129 member, $161 non-member; Videocourse $202 This course provides a thorough industry overview and news member, $253 non-member; Additional Manual $60 mem­ includes AICPA authoritative publications. Content is tai­ ber, $75 non-member. lored to the needs of both practitioners and industry financial pro­ fessionals. Learn to apply important GAAP accounting methods and key tax rules. Bonus — AICPA Audit and Accounting Guide Construction Contractors and Audit Risk Alert Construction To order, write: AICPA Member Satisfaction Team, CPA06, Contractors Industry Developments. Course Level: Basic. P.O. Box 2209; Jersey City, NJ 07303-2209; fax, Recommended CPE credit: Text-10 hours (8 Accounting and 800/362-5066; call 888/777-7077 (8:30 a.m. to 7:00 p.m., Auditing, 2 Taxation); Videocourse-11 hours (9 Accounting and ET); or e-mail [email protected]. Prices do not include Auditing, 2 Taxation). Price: Text $155 member, $193 non-mem­ shipping and handling. Have membership number ready. J u n e 2000 • T he CPA L e t t e r 7

Support the Profession’s PAC; tance to CPAs and the business community ing receipt of the auditor’s letter specifying Contributions Can Be Made Through at large, whether Republican or Democrat. terms of the workpaper review; however, Dues Statements Regulated by the Federal Election examiners may not sign any document that “The AICPA Effective Legislation Commission, the ELC discloses where every implies that the FDIC has agreed to any Committee, the Institute’s political action penny of each dollar is contributed and all conditions in the letter. committee, needs your immediate support personal contributions go directly to candi­ To obtain a copy of the memorandum for it to be effective on Capitol Hill,” says dates running for Congress. When reviewing (RD Memorandum Transmittal 2000-019, Jake Netterville, Chair of Institute’s your 2000-2001 Dues Notice being mailed Review of External Auditors’ Workpapers), Political Leadership Cabinet, formed to fur­ soon, consider designating funds for the contact the FDIC’s Public Information ther strengthen the profession’s political AICPA ELC. For more information, contact Center: call 800/276-6003 or and grassroots network in the states. Lisa Dinackus at 202/434-9276 or e-mail 202/416-6940; fax 202/416-2076; or e- Funds for the ELC come from voluntary [email protected]. mail [email protected]. contributions from thousands of CPAs FDIC Issues Guidance for Examiner House Subcommittee Holds Hearing on across the nation who believe in the profes­ Review of Auditor’s Workpapers FASB’s Pooling of Interests Project sion and its government relations activities. The Federal Deposit Insurance Corporation A House subcommittee held a hearing “Large or small, your contribution, when has released guidance instructing FDIC recently on the Financial Accounting combined with your fellow members of the examiners to review a bank’s external audi­ accounting profession, will make a differ­ Standards Board’s project to eliminate the tors’ workpapers in cases where the bank ence. Legislators in Washington are consid­ pooling of interests method of accounting has a CAMEL rating of 4 or 5, or when the ering changes to laws and regulations that in corporate mergers. Critics of the project examiner has significant concerns with could alter your way of doing business and from the high-technology community con­ bank operations that may have been tested your future,” said Netterville. tended that requiring companies to use the Having a strong PAC enables the by the external auditor. For all examina­ purchase method of accounting could slow Institute to have a voice in issues affecting tions, FDIC examiners are also instructed to business growth. FASB Chairman Edmund the profession and to be part of national obtain from the institution and review all Jenkins defended FASB’s project and debates, such as whether accounting stan­ correspondence between the institution and process, as he did at a Mar. Senate Banking dards should be set by the government or external auditor, with a focus on material Committee hearing on this issue (The CPA by the private sector. Other issues vital to weaknesses and reportable condition com­ Letter, Apr.). The AICPA believes financial the profession include whether the current munications. An auditing interpretation reporting standards can best be set by a pro­ income tax system should be replaced with issued by the AICPA (Section AU 9339.06) fessional, independent private-sector stan­ an alternative system, such as a flat tax or describes the steps an auditor should take to dard-setting body rather than by the govern­ consumption tax. The ELC contributes to provide examiners access to workpapers. ment and wrote all members of the sub­ the election campaigns of pro-business can­ The FDIC notice states that examiners can committee prior to the hearing to empha­ didates who understand the issues of impor­ sign a letter from the auditor acknowledg­ size the Institute’s position.

Compensation Data, Research Software Company Affinity Partner AdvisorSquare Provides Financial Is New Affinity Partner Web Sites Members can now receive discounts on compensation data and AdvisorSquare, the nation’s leading provider of financial Web research software with purchases through the AICPA’s newest sites, now offers AICPA members significant discounts on the affinity partner, the Economic Research Institute. ERI’s development and hosting of custom designed AdvisorSquare Assessor Series saves you time and money by providing com­ financial Web sites. You can establish a fully featured Web site for pensation and benefits information for 4,000 job titles in 5,000 a set-up fee of $300 and a monthly hosting fee of $110/month — U.S., 800 Canadian and 1,400 international locations. AICPA discounts of 57% and 27%, respectively, off standard retail pric­ discounts are available for ERI’s Executive Compensation, ing. Free e-mail hosting for two addresses is included in this price. Salary, Benefit, Relocation, and Geographic Select from a broad range of content features: a mar­ Assessors, as well as for the Geographic Reference keting Brochure Center; a “click and publish” and International Reference Reports. Save at least member Newsletter/Publishing Center offering both financial 10% on all ERI PC software research when you news and business related content; an Investor Research subscribe online using the AICPA’s Affinity Center providing a broad range of investment content; Program (15% for those with the Accredited in a Seminar Wizard that enables your Web site to pro­ Business Valuation designation). Save over 70% on ERI’s mote and register attendees at seminars; more than 50 Financial Executive Compensation Assessor that analyzes and provides Calculators; Investor Portfolio Reporting; e-mail hosting; unique more than 10,000 proxies and 10-Ks. Call 800/627-3697 or business-building tools; and more. visit www.erieri.com/aicpapage.cfm . Refer to key code For more information, call 800/251-3863 or visit 5245 and PIN #AIC98. www.aicpa.advisorsquare.com. 8 T he CPA L etter • June 2 0 0 0

State CPA Societies Working with National Vision mittee model that can be used to run town-hall like meetings with members, working on designing a state society model for the Team on Portal, XYZ Designation future to give association leadership guidance on possible alterna­ Believing that the profession’s Internet portal and proposed tives when considering the long-term impact of the portal and “XYZ” designation initiatives are major leaps toward realizing the XYZ on the future of societies, and continuing major grassroots CPA Vision, the national CPA Vision Team is working with the communications efforts on the CPA Vision. state CPA societies to spread the word on these developments and Stay tuned to this newsletter for more on how the AICPA, the to obtain members’ input on them. “Those who bought into the CPA Vision Team and state societies are helping to propel the pro­ Vision find the portal and XYZ projects to be logical extensions fession into the 21st century. and deserving of support,” said Tom Hood, chair of the CPA Vision Team. “Through these two efforts, CPAs will be in the best Highlights of April Board of Directors’ Meeting position to thrive in the global, electronic economy.” Involvement by the state societies is instrumental in helping to Among other actions at its meeting on Apr. 27-28, the AICPA bring the portal and designation projects to fruition (creation of the Board of Directors: XYZ designation is subject to a vote by the AICPA membership). • Approved resolutions for presentation to Council (May meet­ In fact, an article in the Apr. CPA Letter talked about the importance ing) regarding permitting public members on the Professional of the organizations serving the profession — the AICPA and state Ethics Executive Committee and the Board of Examiners. societies — being agents of change by changing themselves. • Received updates on the Internet vertical portal project and on “The CPA Vision clearly talked about the expansion and stay­ the proposed new global business professional designation. ing power of the CPA brand in the marketplace,” said Hood. • Approved a proposed Council resolution to integrate the “Development of the portal and a broad-based business profes­ Information Technology Alliance into a new Information sional designation will create new markets and provide a long­ Technology firm section. term evolutionary solution for the profession.” • Discussed national regulatory matters, including an SEC Several initiatives designed to engage members in the process Practice Section proposal to improve the disciplinary process. have been presented to state society chief executive officers by the • Received a proposed AICPA comment letter on the SEC’s CPA Vision Team. They include holding a second National Future Concepts Release for establishing international accounting Forum at which participants who crafted the original Vision state­ standards for use with registrant filings and authorized its

ment will consider the XYZ initiative; designing an issues com­ release once finalized.

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reSOURCE — from this continued on page 4 Technical Practice — state society and — AICPA’s account­ Professional Standards — an online learning is completely searchable by consists of (statements of position of both Online all AICPA Audit and Accounting Guides (codified standards and interpretations reSOURCE Online issued by the AICPA), ation. The ability to easily print out CPE accounting and auditing and a nonauthor­ itative section of questions and answers), $295 per year for non-members. field of study, keyword or title. The ments seg­ cover accountingconsulting services, management and and tax­auditing, offered, as is an administrativetool trackingto aggregate in-processpleted CPE by field of study. and com­ ing and auditing literature. area of the site, AICPA members can pay society membership dues will be added in well as unlimited CPE for the of low $95 price per year for AICPA members and state profile records on the site. are features enablingstate or usersAICPA membership to packets request and test certificates of completion is also their dues online. Such payment of state tool that provides approximatelyhours of training and resources, 1,200 delivered in one- to two-hour segments. It enables states and/or the AICPA. Members can InfoBytes the near future. users to receive “just-in-time” learning, as tralized national membershipwill enable searching for database members across opt out of the search function by contact­ ing their state societies or updating their AICPA information (benefits,ments, dues) require­ is available on the site, as to update state and AICPA membershipprofile information. National Membership Database Membership services A ids AICPA Online Dues Payment AICPA InfoBytes • • • • • • • • — (see column — a mechanism A transitional Web — a national catalog listing AICPA InfoBytes cpaweb.org. CPE Catalog CPE Transcript Wizard atright) links to the TranscriptWizard. Completed courses that are taken from a add on courses taken from other sources. In addition, CPE programs offered by each state soci­ Usersety. can search for vendor, location, for users to view, recordreports and on generatetheir CPE credit histories.user’s home state will be reflectedmatically auto­ in the transcript, and users can inputting the username and passwordtheir state society logos and the AICPA the respectiveof associations. category and date. and state societies. A user is prompted to received), received), users will see a Main Menu with logo. The logos will link to the Web sites This This early rollout of CPA-targeted services Personalized membercpaweb.org offers a personalized registra­registrationtion process for members of the AICPA provide a state society and related mem­bership number (up to five states, with one The shared services entity, a joint owner­ being “primary”). Once logged on (after • • • • • site, cpaweb.org is a first step in the move state CPA societies, exists to improve the sion, maintain a national database of mem­ offers these valuable products these capabilities: valuable and offers ship venture of the AICPA and participating aggregate operating costs. It also will support in the fall. All of cpaweb.org’s functionalities bewill foldedinto the portal thattime. at AICPA, State Societies Launch Web CPAs with a single source for essential prod­ CPA societies plus the District of Columbia, launched products and services available to the profes­ bers and eliminate redundancies to reduce the portal. In a landmark collaborative effort to provide through a shared services entity, have toward the profession’s Internet portal (cur­ rently referredto as “cpa2biz”) to be launched Sitefor Shared Products and Services ucts and services, the AICPA and 50 state

Member is a com­ Vol. 80No. Vol. 6

CPA LetterCPA nextedition o fthe newslet­ ter will be beginning published of September. the This bined issue for the months of July and August The The CPA Letter CPA The 10 Software Revenue Support ElderCare Association Seeks CPA 7 Highlights AmericanArbitration Third Set ofQs&As on Initiatives Launched to Report Finds Audit Quality Quality Audit Finds Report Sound” “Fundamentally 5&6 Statement ofPosition Panelists Recognition Released Benefits That Should Not Should That Benefits 8 Practitioners Panel on Audit on Panel Discussion Effectiveness Feature: Special 00-2 Issued on Films Missed Be 3 4 2 FormerAICPA President Philip B. Chenok Publishes Book on Accounting Profession July/August 2000 2000 July/August A News Report to Members

A merican Institute O f C ertified Public A c c o u n t a n t s 2 The CPA L etter • July/A ugust 2000

Send Us Your E-Mail Address Former AICPA President Philip Business Plan in Development If you have not submitted your e-mail B. Chenok Publishes Book on on “XYZ” Initiative address to us or have changed it Accounting Profession Progress continues on the initiative to cre­ recently, send your e-mail address ate a new, global business professional to [email protected]. Indicate “e- Chronicling the ever-changing and challenging times of the account­ designation — currently called “XYZ.” mail address update” in the subject Members of the eight accountancy bodies header field to help us process the newsbriefs ing profession from 1980 to 1995 is a just-published book by the involved in the effort have been working submissions more efficiently. Be to develop a preliminary business plan for sure to include your full name, and, AICPA’s president during that period, Philip B. Chenok. Foundations for consideration by the leadership of each if known, your membership number on the organization. e-mail message. Be assured the AICPA the Future: The AICPA from 1980-1995 documents the many seminal events dur­ People from around the world have will not sell your e-mail address to outside been cooperating in the development of third parties. ing those critical years for the profession, including a doubling of the Institute’s this business plan, and the expertise of all membership, the expansion of services accountancy Institutes is being drawn on AICPA Annual Members’ offered to clients and employers, and a to understand and prepare for the work Meeting to Be Held Oct. 24 new focus on strategic planning and trend ahead. An outside agency has been hired to The AICPA’s Annual Members’ Meeting monitoring. prepare a marketing plan, an essential will be held on Tuesday, Oct. 24, at the On the cutting edge of the tremendous component of the overall business plan. In Venetian Resort Hotel Casino in Las changes that occurred within the business addition, refinement of the competencies Vegas. Members also are invited to community during those 15 years, the needed and the disciplines to be eligible observe Council’s deliberations, which accounting profession rose to the chal­ for the XYZ designation is under way. will take place Oct. 22-24. CPE will be lenges and capitalized on opportunities provided, as appropriate, depending upon that emerged. The book not only imparts a John Hunnicutt; [email protected] the content of the final agenda. For infor­ segment of the profession’s history to mation, contact the Meetings & future generations, it also portrays Conferences Team at 201/938-3232. accounting as an important and exciting field in which to work. Next ABV Exam to Be Many leaders of the profession during PUBLIC MEETING NOTICES that time are quoted and contributed infor­ For detailed agendas, dial 201/938-3787 Held Nov. 6 mation to the book. Some of the topics from a fax machine and key in document The fourth Accredited in Business covered include an emergence of legal lia­ no. 1206 two weeks prior to these Valuation Exam will be administered on bility suits, the AICPA’s becoming a polit­ meetings. Nov. 6. CPAs seeking to earn the ABV cre­ ical force, use of strategic planning to dential can obtain information about the shape the future, changes in the Code of Accounting & Review Services program from a candidate handbook that is Professional Conduct, and a repositioned Committee: July 20-21, San Francisco; now available online (www.aicpa.org/mem- Institute in response to members’ needs. Aug. 17-19, Boston bers/div/mcs/abv.htm), along with a pro­ Individuals interested in obtaining a Accounting Standards Executive gram application, experience affidavit and copy of the book (ISBN: 0-76230-672-6) Committee: July 25-26, Seattle; Sept. exam sites. Applications are due Aug. 31. should contact JAI Books (the publisher): 12-13, New York An ABV information kit is available write P.O. Box 945, New York, NY Auditing Standards Board: July 18-19, through the AICPA 24-Hour Fax Hotline 10159-0945; call 888/437-4636; New York (dial 201/938-3787 from a fax machine and fax 212/633-3680; or e-mail usinfo- Professional Ethics Executive key in document nos. 492, 493 and 494). [email protected]. While the full retail price Committee: Aug. 10-11, New York Members with questions about the of the book is $78.50, AICPA members Tax Executive Committee: July 31, New ABV program should call 888/777-7077, are offered a limited-time only discount York fax 888/445-3999, or contact Madelaine price of $54.95 (plus shipping; sales tax Feldman at 201/938-3653 or also applies for New York State residents). Other Meetings [email protected]. Available: late July. Peer Review Board: Aug. 7-9, Denver

The CPA Letter (ISSN 0094-792x) July/August 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775,212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L. Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] J u l y /A u g u s t 2000 • T he CPA L e t t e r 3

Electronic Submission of Accounting and Lend to or Finance the Activities of Others, An Amendment of Existing AICPA Audit and Accounting Guides. The proposed SOP Auditing Hotline Questions Encouraged eliminates differences in accounting and disclosure established by Members have an alternative to calling the AICPA’s Accounting & the respective AICPA Guides (Banks and Savings Institutions, Auditing Technical Hotline or posting a question to Audits of Credit Unions, and Audits of Finance Companies), and www.aicpa.org. For the most efficient service, writ­ carries forward accounting guidance for transactions ten questions on accounting, auditing, attestation or determined to be unique to certain financial institu­ SSARS issues should be e-mailed to a recently accounting tions. The final provisions would be incorporated in established, special Internet post office box, aahot- & auditing a final combined Guide. Because the scope is applic­ [email protected]. n e w s able to entities with activities that lend to or finance After receiving the e-mail message, the Hotline the activities of others, entities with such activities will contact requesters by phone, continuing its tradition of pro­ should be alert to the applicability of this exposure draft. This viding live responses to technical questions. As an added benefit, includes, but is not limited to, banks, savings institutions, credit the Hotline manager will have researched your question before unions, finance companies, corporate credit unions, and mort­ calling. gage companies. A final SOP would be effective for years begin­ Turnaround time will generally be the same day or within 24 ning after Dec. 15, 2000. hours, at the latest, except where extensive research is required. Comments are due Aug. 31. Obtain a copy of the exposure Specific deadlines will be accommodated whenever possible. As in draft at: the past, the Hotline does not provide technical advice in writing. When e-mailing a question to [email protected], be sure to www.aicpa.org/members/div/acctstd/edo/index.htm specify your telephone number and a deadline, if applicable. Use the subject header field of your e-mail to briefly summarize the ISB Issues Standard on Former Firm technical issue. In the near future, we will provide a special con­ sultation form for submitting questions. Professionals Joining Audit Clients, Proposal to Members may still access this free service by calling Defer Effective Date of its Standard No. 2 888/777-7077, faxing questions to 212/596-6233, or posting The Independence Standards Board unanimously approved inquiries to www.aicpa.org. issuance of a standard, Employment with Audit Clients, that com­ Watch this newsletter for more information in the months ahead. prehensively addresses and modernizes the rules relating to the [email protected] independence concerns raised when a professional employee or partner of an audit firm becomes employed by a firm audit client. Generally under the new standard, an audit firm’s independence Statement of Position 00-2 Issued on Films would be impaired whenever a former firm professional joins an Statement of Position 00-2, Accounting by Producers or audit client unless the firm has implemented safeguards that effec­ Distributors of Films (No. 014924CPA07), recently was issued by tively eliminate the risk to the quality of the firm’s audit that such the Accounting Standards Executive Committee. The SOP employment may create. replaces FASB Statement No. 53, Financial Reporting by The standard describes a program of safeguards that would be Producers and Distributors of Motion Picture Films (which is deemed to accomplish that objective. One set of safeguards would rescinded by FASB Statement No. 139), and is effective for finan­ apply when an audit firm employee or partner enters into employ­ cial statements for fiscal years beginning after Dec. 15, 2000. ment negotiations with a firm audit client. These safeguards Earlier application is encouraged. include removal of the individual from the audit and review of the The SOP defines films as feature films, television specials, professional’s work. television series, or similar products (including animated films A second set of safeguards would apply when firm profession­ and television programming) that are sold, licensed, or exhibited, als join firm audit clients. They are designed to assure that there is whether produced on film, video tape, digital, or other video no circumvention of the audit plan and to reinforce the objectivity recording format. Certain of the SOP’s requirements differ from of the remaining audit team members. those in FASB Statement No. 53 or practice. In addition, the standard specifies the circumstances under To order a copy of SOP 00-2, contact the AICPA Member which capital and retirement balances owed to the former firm Satisfaction Center (see page 9; price: $10.50 member, $13 professional must be settled. The standard is effective for employ­ non-member). ment situations arising after Dec. 31, 2000. Also approved was issuance of an exposure draft to defer the Exposure Draft of Statement of Position for effective date of ISB Standard No. 2, Certain Independence Implications of Audits of Mutual Funds and Related Entities. Financial Activities Issued Copies of each of these documents are available on the ISB’s The AICPA’s Accounting Standards Executive Committee has Web site: issued an exposure draft of a proposed statement of position, □ www.cpaindependence.org Accounting by Certain Financial Institutions and Entities That 4 T he CPA L etter • Ju l y /A ug u st 20 0 0

To obtain a copy of the study, contact the Member Satisfaction AICPA Publishes Research Study on Center (see page 9; price: $20 member, $25 non-member). Financial Fraud Panel on Audit Effectiveness In June, the AICPA published a research study titled Fraud- Related SEC Enforcement Actions Against Auditors: 1987-1997 Discussion Report Finds Audit (No. 990040CPA07), written by Mark S. Beasley of North Carolina State University, Joseph V. Carcello of the University of Quality “Fundamentally Sound" Tennessee, and Dana R. Hermanson of Kennesaw State University. This study examines fraud-related SEC enforcement After almost two years of comprehensive research and thoughtful actions against auditors from Jan. 1987 through Dec. 1997 analysis, the Public Oversight Board-appointed Panel on to identify settings in which auditors were cited by the SEC Audit Effectiveness stated in its discussion report released as well as alleged deficiencies in the audit process that news June 6 that “both the profession and the quality of its audits caused the auditors to be cited. The data in this study were are fundamentally sound.” The report also noted that obtained from Fraudulent Financial Reporting: update exhaustive research did not identify any instances in which 1987-1997, An Analysis ofU. S. Public Companies (copy­ providing non-audit services had a negative effect on audit right COSO, 1999) and from the underlying SEC enforcement effectiveness. In fact, it found that on roughly one-fourth of audit actions. The present study examines the 56 of 204 cases from the engagements in which consulting services also were provided, the COSO study in which the auditor was cited by the SEC in an services had a positive impact on the effectiveness of the audit. Accounting and Auditing Enforcement Release. The discussion report, available at www.pobauditpanel.org, The underlying aspects of the frauds and the related audit also contained specific recommendations for continuing to issues, including alleged deficiencies in auditor performance, improve audit quality. noted in the SEC enforcement actions are highlighted. By exam­ “Many recommendations in the report endorse AICPA initia­ ining these fraud cases and the related deficiencies in the audit tives currently under way and we appreciate the Panel’s vote of process, the study provides insights for auditors and regulators to confidence,” said AICPA President & CEO Barry Melancon. consider as they work to continuously improve the auditing pro­ “Other recommendations potentially require more thorough fession’s ability to detect instances of material financial statement study, cost-benefit analysis, and a review of their potential impact fraud. This study is one of five projects sponsored by the Auditing on our successful, long-established strategy of self-regulation and Standards Board as part of its commitment to evaluate the effec­ independent oversight. We intend to work cooperatively with the tiveness of SAS No. 82, Consideration of Fraud in a Financial Panel and others to ensure that we can meet our mutual Statement Audit. The board expects to receive and evaluate the objectives and serve investors, while maintaining consistency results of all five studies this fall. with our strategy.”

Task Force Studying Alternatives to Current Estate Tax System The AICPA Tax Division’s Trust, Estate mailed to more than 3,000 AICPA visit www.aicpa.org/estatetaxsur- and Gift Tax Technical Resource Panel cur­ members requesting input and feed­ vey.htm. Responses are requested by rently has a task force studying various back on this issue. Members who Tax Aug. 1. The detailed analysis/report alternatives to the current estate tax system, have not already completed the sur­ should be complete and available by including repeal. A survey recently was e- vey but who wish to do so should i n f o the end of the year.

continued from page 1 — cpaweb.org Launches use interactive worksheets, checklists and spreadsheets; and and Audit Risk Alerts, and Accounting Trends & Techniques. link to external sources for more information. In addition, reSOURCE Online provides easy access to and navigation of Profile Firm Information will be presented in Excel work­ all of the online professional literature. Each title is fully books to enable practitioners to benchmark their firms’ perfor­ linked and searchable. A limited-time free trial period is mance. Access to E-MAP on cpaweb.org initially is available on offered to all that access it. After this trial period, the service a pilot basis. In a future release of the site, the product will be will be available as affordably priced individual titles and as a opened up to all users, priced for both AICPA members and non­ library for both single and firm usage. members. • E-MAP (Managing an Accounting Practice) — an online ref­ • Search — an integrated search function allowing a user to erence and toolkit for managing small- to medium-sized firms search professional literature, E-MAP and aicpa.org is avail­ (including sole practitioners). E-MAP provides easy desktop able on cpaweb.org. access to extensive material needed to manage all aspects of a Watch The CPA Letter for more on these and many new services professional practice. It enables users to view text; search text; that will ultimately become part of the profession’s Internet portal. J uly/A ugust 2000 • T he CPA L etter5

Member Benefits That Should Not Be Missed AICPA member services help CPAs succeed and expand their professional horizons. Information Needs The Center for Knowledge and Research Services (formerly the Library Services Division) serves as the library of record for the CPA profession with continuing, custom, quick research and document delivery; serves as a critical broker of third-party information services; and provides value-added market and other in-depth research and analysis for members and staff. Call 888/777-7077; by fax, dial 201/938-3955; or by e-mail, send a message to [email protected]. The Center for Investment Advisory Services provides the tools, training, resources and relationships you need to develop or expand an investment advisory practice. The cornerstone of the center is its relationship with Fidelity Investments Institutional Brokerage Group (FIIBG). Also take advantage of special AICPA member savings on investment planning products and services from other leading companies. Visit http://investmentadvisory.aicpa.org. The Center for Excellence in Financial Management is an interactive resource that can help members involved in financial man­ agement retool their current skills. It integrates the concepts of the multidisciplinary, cross-functional body of knowledge covering the management process, technology and resources that reflect the expanded body of knowledge of today’s CPAs in finance. To learn more, visit www.aicpa.org, call 212/596-6157 or fax 212/596-6025. The Technical Information Hotline offers non-authoritative answers to member queries about accounting, financial reporting, auditing, attestation and accounting and review services. Members may access this free service by e-mailing [email protected], calling 888/777-7077 or faxing 212/596-6233. The Professional Ethics Division’s Ethics Hotline offers valuable information and can act as an ethics sounding board to members who face ethics issues in their practices and to members who are not in public practice. The hotline’s toll-free number is 888/777-7077. The AICPA Fax Hotline gives members 24-hour, seven-day-a-week access to pertinent professional information via a fax machine. Dial 201/938-3787 on a fax machine, and follow the voice cues. AICPA Online (www.aicpa.org) offers members immediate access to news about the latest developments affecting the profession, as well as a convenient way to join the Institute or learn about products and services. Also visit cpaweb.org (see page 1). Marketing Tools The AICPA offers several newsletters that serve as client service publications: the monthly CPA Client Bulletin contains articles on tax and financial planning ideas for individuals and businesses, as well as stories on general business issues, while the quarterly CPA Client Tax Letter focuses solely on tax issues for individuals and businesses, including articles on general tax planning, legislation and cases and regulations. Available through the AICPA Member Satisfaction Center at 888/777-7077. Special Assistance The AICPA Benevolent Fund helps members and their families when they face financial difficulty caused by serious illness, accident, death or other major misfortunes. Contact Elizabeth Cich at 201/938-3490. Insurance/Retirement Programs Term-Life Insurance — up to $2 million in coverage if a member of both AICPA and a state CPA society (up to $1.5 million if a member of the AICPA only). Includes a cash accumulation fund which can be used to purchase paid-up life insurance and for savings purposes. Group Variable Universal Life Insurance — up to $2 million in term life insurance if a member of both the AICPA and a state CPA society (up to $1.5 million if a member of the AICPA only). Investments in equity, bond or fixed-rate funds available with tax- deferred earnings. Long-Term Disability Income Plan — provides monthly payments of $1,000 to $10,000, depending on earnings and other coverage. Group Insurance Plan — up to $500,000 in term-life insurance plus accidental death and dismemberment benefits for CPA firms and their employees. Long-Term Care Insurance Program — available for eligible members and their spouses, parents and parents-in-law. Nursing home and home care benefits of up to $250 per day are available. Personal Liability Umbrella Security — provides CPAs with up to $5 million in coverage for liability injury and property damage claims that exceed primary automobile, homeowners or renters coverage. For all of the above choices, call 800/223-7473. Professional Liability Insurance Plan — protection of $100,000 to $20 million for members in public practice for claims related to professional services. Call 800/221-3023. CPA EmployerGard — provides comprehensive protection against employment-related claims, such as wrongful termination, age, race or gender discrimination and other workplace-related lawsuits. Call 800/221-3023. Medicare Supplement Plan — fills the gaps in Medicare coverage for hospital and medical expenses for members and spouses ages 65+. Call 800/749-6983. Vehicle Insurance Plan — preferred rates for members and families. Call 800/847-2886. Home Insurance Plan — full replacement cost coverage and comprehensive personal liability protection. Call 800/847-7233. 6 T he CPA Letter • July/August 2000

Retirement Programs — defined contribution plans from T. Rowe Price, including money purchase, pension, profit sharing, 401(k) and SEP IRAs for proprietors, partners, professional corporations, and employees. Call 800/382-4272. Variable Annuity/Great-West Life & Annuity Insurance Company — offers AICPA members a non-qualified variable annuity which, under current tax laws, allows contributions to grow tax-deferred. Call 800/355-1608. Affinity Programs AdvisorSquare enables members to establish a fully featured Web site for a set-up fee of only $300 and a monthly hosting fee of $110, representing discounts of 57% and 27%, respectively, off standard retail pricing. Free e-mail hosting for two addresses is included and there are many special content features. Call 800/251-3863 or visit www.aicpa.advisorsquare.com. Airborne lets AICPA members save up to 44% off the competition’s published rates. Members receive free on-call pickup from most locations, and convenient online member service for package tracking, locating drop boxes and more. 800/636-2377. Dell Computer Corporation offers a 6% discount on Dell’s PowerEdge file servers, OptiPlex desktops and Latitude CP laptops. Also save on DellWare software, accessories, service and peripherals. Call Dell at 800/568-8313 or access your AICPA Premier Page at www.dell.com/premier. Enter your user name “AICPA” and password “CPADELL99.” (Dell Dimension and Dell Inspiron product lines are not discounted by Dell.) ERI’s Assessor Series saves time and money by providing compensation and benefits information for 4,000 job titles in 5,000 U.S., 800 Canadian and 1,400 international locations. AICPA discounts are available for ERI’s executive compensation, salary, benefit, reloca­ tion and international reference reports. Save at least 10% on all ERI PC software research when you subscribe online using AICPA’s Affinity Program (15% for all ABVs). Save over 70% on ERI’s Executive Compensation Assessor that analyzes and provides over 10,000 proxies and 10-Ks. Call 800/627-3697 or go to www.erieri.com/aicpapage.cfm. Refer to key code 5245 and your PIN # AIC98. First USA Bank provides the AICPA/First USA Card, which offers a Visa Gold or Platinum Card with a low six-billing-period intro­ ductory rate, followed by a low, competitive annual variable rate. In addition, the AICPA/First USA Card offers “ValueMiles,” a free air­ line travel program. 800/254-0910. Hertz Car Rental offers a 20% discount off daily member benefit rates, plus a 5% to 15% discount on weekend, weekly and monthly car rental rates. Members also qualify for free annual membership in the Hertz #lGold Club (a $50 value). Special coupons and upgrades are avail­ able, too. For reservations call 800/654-2200 and refer to CDP #12353. For your free Hertz #1 Gold Club Membership, call 888/777-7077. IBM gives AICPA members savings of up to 7% on over 250 premium quality IBM products through the AICPA/IBM Members Plus Program, including ThinkPads, Netfinity Servers, Desktop PCs, ViaVoice, and products for the home office and family. You can finance your purchases through SuccessLease and get a special deal on IBM’s HomePage Creator. Shop online at www.ibm.com/smallbusi- ness/aicpa or call IBM at 888/426-5800 and reference priority code 6B8XB032, value code CAP. KnowledgeSpace® lets you save nearly 50% off Arthur Andersen’s KnowledgeSpace. This one-stop, Web-based knowledge service is just $500 a year for AICPA members ($995 a year for non-members). For a 30-day free trial membership, call 888/577-8778. Paymentech offers members the ability to accept credit card payments at processing rates as low as 1.8%. Plus, pay no application fees or conversion fees and receive all merchant supplies absolutely free. Contact Paymentech’s ProActive Sales Group at 888/213-8445. Or fax an existing merchant processing statement to 214/849-3645 for a “no obligation” free analysis. Research Institute of America (RIA Group) helps members save 10% on new purchases and 5% on renewal purchases of tax infor­ mation products from the leading authority on tax research, RIA. Your AICPA membership entitles you to discounts on RIA electronic and print services, including RIA’s highly acclaimed Internet-based tax research system, CHECKPOINT. Call 800/431-9025, extension 3, and provide your AICPA membership number when ordering. ResumeMatch, an online resume referral and job posting service, allows AICPA member job seekers to post their resumes and search available jobs free when they register via the Web at www.aicpa.org. Registration by mail costs $15. AICPA member employers can post an available job or conduct searches of available candidates at special “member-only discounts” by calling 800/837-1804. Robert Half International offers substantial discounts on new temporary, permanent and contract professional placement fees through Accountemps, Robert Half, and RHI Management Resources. Members will save 10% off permanent placement fees for Robert Half; $25 off each 40-hour Accountemps temporary assignment, (up to a maximum of $100 for 160 hours or more) and $50 off each 40- hour RHI Management Resources contract assignment (up to a maximum of $200 for 160 hours or more). 888/744—4089. Sprint offers AICPA members 5% savings on their long-distance phone bills. Members can also take advantage of Sprint’s Business Flex All Calls, All Day, including a low 6.90 flat interstate rate, flat in-state and international rates. 800/953-4214. Standard & Poor’s provides 20% savings on S&P Advantage, Advisor Insight and Planner Insight. Whether you are an adviser, planner, tax professional, business owner or manager, this S&P program provides the most comprehensive suite of products and services at special member savings. Call 800/221-5277 and mention your AICPA membership number when ordering. Wells Fargo Home Mortgage provides AICPA members with many cost-saving features, including competitive rates, a zero-point option and a no-cost, 60-day rate lock option. The entire application can be completed by phone, with a loan decision in as little as 24 hours. In many cases, closings can occur in as few as 15 business days from approval. Receive a complimentary 4-day “Getaway” after closing on a home purchase or refinance through this program. 800/272-1210. Xerox gives AICPA members discounts of up to 20% on Xerox products (excluding service contracts, supplies and personal line copiers). Call 8OO-ASK-XEROX ext. CPA (800/275-9376, ext. 272) and mention AICPA contract #0706109. July/August 2000 • The CPA L e t t e r7

Exposure Draft for Version 2.0 of SysTrust Principles and ElderCare engagements in its new policy. Confusion among under­ Criteria Issued writers and practitioners over the past two years as to what consti­ The AICPA/CICA Systems Reliability Task Force has issued an tutes CPA ElderCare Services led the AICPA PLIP Committee to exposure draft of Version 2.0 of the SysTrust™ Principles and advise the ElderCare Task Force to work with representatives from Criteria for Systems Reliability. The SysTrust CNA Pro and AON Insurance Services to ensure the Principles and Criteria provide the basis for the needs of ElderCare practitioners would be met. They SysTrust assurance service. The focus of the SysTrust have since worked hand in hand with the task force to service is to increase the confidence of management, assurance make certain practitioners’ coverage concerns would customers, and business partners in systems that sup­ services be addressed by the AICPA Professional Liability port a business or a particular activity. Insurance Program. The principal features of Version 2.0 include: (a) At the same time, representatives from CNA and AON revision to the reporting guidance to permit reports on any one have provided the task force with input on potential liability issues of the four SysTrust principles of availability, security, integrity in an ElderCare practice and how to address them. This working or maintainability, (b) clarification of the extent to which the relationship has improved the CPA’s ability to address the risks security principle covers the issue of privacy, (c) provision for involved. For more information about new coverage options, con­ engagements for systems in the pre-implementation phase, (d) tact your local program representative or AON at 800/221-3023. expansion of the guidance to address agreed-upon procedures Another major initiative is a revamped ElderCare Services pres­ and consulting engagements, and (e) additional examples of ence on AICPA Online. CPA ElderCare Services can be found in practitioners’ reports. the redesigned Assurance Services section on www.aicpa.org. In the The exposure draft of SysTrust™ Principles and Criteria for ElderCare section you will find the ElderCare Competency Model Systems Reliability, Version 2.0 is available on the AICPA Web site document and a downloadable version of the CPA ElderCare at www.aicpa.org/assurance/stintro.htm. Comments on the expo­ Services Logo. There is information on all the products available to sure draft, which are due Aug. 15, should be submitted to Erin support your practice, a calendar of ElderCare seminars available Mackler, SysTrust Team Leader, via e-mail at [email protected]. through the state societies and information on the First Annual AICPA/CICA ElderCare Conference on Oct. 26 and 27. Initiatives Launched to Support ElderCare Practitioners For more information on CPA ElderCare Services, contact Ann Interest in CPA ElderCare Services continues to be strong among Sammon at [email protected]. the AICPA membership, particularly practitioners in smaller firms. The AICPA, state societies, AON and CNA have assisted the AICPA/CICA ElderCare Task Force in launching new initiatives Practice Guide, CPE Course on ElderCare Available that will support practitioners offering CPA ElderCare Services by CPA ElderCare: A Practitioner’s Resource Guide (Revised) giving them a wider array of training options, insurance coverage (No. 022504CPA07) answers questions about offering CPA options and access to ElderCare information. Eldercare Services to older adult clients and their families, and This year, three state societies are supporting ElderCare training provides the fundamentals to get started in this practice area. It efforts by scheduling all five recommended AICPA ElderCare train­ offers background information, federal and state program infor­ ing courses in their states in one convenient location during a one- mation and much more. Broad coverage is given to such vital week period to reduce travel costs and minimize scheduling diffi­ areas as choosing a nursing home, long-term care insurance culties. These training programs, called ElderCare Express Training and federal and state programs for the elderly. Includes two Programs, will be taught by the course authors, task force members PowerPoint presentations, a sample marketing brochure, the and other top instructors. In addition, there will be networking latest Medicare updates, FAQs and sample letters, and press events available in conjunction with each of these programs spon­ releases. Price: $129 member, $162 non-member. sored by the AICPA/CICA ElderCare Task Force. Developing an ElderCare Practice (Text-No. The New Jersey State Society of CPAs will be holding 730070CPA07; Videocourse-No. 181640CPA07; Additional ElderCare Express Training from July 31 to Aug. 4 in their Manual-No. 351640CPA07) is designed to tell CPAs what they Roseland training facility, within an hour’s drive from midtown need to know about the development and delivery of a practice Manhattan. Call the society directly at 973/226-4494 for registra­ that serves the elderly, one of the fastest-growing demographic tion and hotel information, or visit www.njscpa.org. segments today. It focuses on both the professional and practi­ The Nevada State Society of CPAs will hold its program from cal issues involved in becoming qualified to provide this unique Sept. 18 to Sept. 22 at Harrah’s Casino and Hotel in Las Vegas. Call and potentially rewarding service. Course Level: Basic. the society at 702/647-9560 for registration and hotel information, Recommended CPE credit hours: Text - 8; Videocourse - 9 or visit www.nevadacpa.org to register online. The Society of Louisiana CPAs has scheduled a training pro­ hours. Price: Text - $119 member, $149 non-member; Videocourse - $149 member, $186 non-member; Additional gram for the week of Nov. 13 at its facility in Kenner, situated Manual - $45 member, $56 non-member. between the airport and downtown New Orleans. Call the society at Either product can be ordered through the Member 504/464-1000 or visit www.lcpa.org. Satisfaction Team (see page 9). For more information on other Also, the AICPA Professional Liability Insurance Program is ElderCare CPE courses, visit www.aicpa.org/store/psearch.htm. offering broad coverage options for services arising out of 8 8 The CPA L e t t e r • J u l y /A u g u s t 2000

shared between the small-business cus­ addition, the state societies and the AICPA tomers and the portal, and the portal’s will hold a portion of the shares. These share would benefit the profession. holdings together with contractual com­ The purchasing discounts are by no mitments from partners ensure that the means the whole of what will be profession will be the dominant voice in available to us. Nor are they by the portal. Substantial financial commit­ chair's themselves why the portal will be a ments from strategic partners will help the corner strategic achievement. portal become a reality. There will be lower costs for The portal will create new relationships administrative services by the among our members. It will network over AICPA and state societies, better member 300,000 CPAs with experiences and ideas services, and a great opportunity to to share. I see our network as the ultimate strengthen relationships between CPAs members’ organization. The AICPA has and small businesses. Whether the small always been a members’ organization. By Robert K. Elliott, CPA Standards and service ideas come about Chair, AICPA Board of Directors businesses are employers or clients, CPAs can help them get started in conducting because we donate our time and thoughts Council’s overwhelming vote in May to business over the Internet. The portal will to the benefit of the profession as a whole. establish an Internet portal for the profes­ provide the technical assistance, with a Our reputation for trust and integrity sion is the beginning of a great strategic bonus to the CPA for having brought in comes about partly because each one of us achievement. We’re taking a major step the customer. This can enhance relation­ knows how important those qualities are to toward fulfilling the Vision and moving ships, because the CPA will be instrumen­ the profession as a whole. Now we will be into the 21st century. tal in assisting the small business to adapt able to share service ideas and information The portal will serve our financial and to the newest business model. Such action in a more specific way with richer results professional interests in wonderful ways. is consistent with the Vision concept of for us and for our customers. As I pointed out in a prior column, by moving up the value chain in providing CPAs who take advantage of the net­ bringing together CPAs, clients and services, as well as with the concept of work by participation should be fully employers, and suppliers, enough buying focusing on customers’ needs. Businesses aware that the profession’s knowledge is power will be created to command dis­ that do not adapt to Internet opportunities the strength of each and every one of us. It counts for CPA-enabled Internet pur­ will find their competitors winning has been that way in the past. We can chases. The market is estimated at $3.3 market share. make it much more so in the future. trillion annually. That’s the potential e- The portal will be run as a separate for- purchases by small businesses that use or profit company with the members of the [email protected] employ CPAs. The rewards would be AICPA and state societies as owners. In

Third Set of Qs&As on Software Revenue Recognition Released The AICPA staff, assisted by industry experts, released a third they have been placed online at: set of technical questions and answers on financial accounting and reporting issues related to Statement of Position 97-2, www.aicpa.org/members/div/acctstd/general/othitem.htm

Software Revenue Recognition. These Qs&As will be housed in the AICPA’s Technical Practice Aids, a publication available Direct questions to Dan Noll; [email protected] from the Member Satisfaction Center (see page 9). In addition,

Under the automatic disciplinary provisions of the Institute’s bylaws, Bonnie Spicer Greenhalgh of Apex, N.C., effective Apr. 4 , 2000. the following members have had their AICPA member­ As a result of investigations of alleged violations of ships: the Code of Professional Conduct of the AICPA — Terminated because of final judgments of convic­ and/or state CPA societies, the following ethics cases tion for crimes punishable by imprisonment for more disciplinary have been resolved by settlement agreement under than one year: actions the Joint Ethics Enforcement Program effective on • Mario T. Scaduto of Manhattan Beach, Calif., the dates indicated: effective Apr. 4, 2000. • Stephen P. Morin of Manchester, N.H., expelled Apr. 3, 2000. • George A. Patrick of Cheshire, Conn., effective Apr. 12, 2000. • Jiann-Pyng Soon of Cerritos, Calif., expelled Apr. 24, 2000. — Terminated following revocation of their CPA certificates, Details on these disciplinary actions can be accessed through: licenses and/or permits by their state accountancy boards: www.aicpa.org/pubs/cpaltr/index.htm • Robert E. Brennan of Colts Neck, N.J., effective Apr. 3, 2000. Ju ly/A u g u st 2 0 0 0 • T he CPA L etter9

PFS Exam Review Series. A series of computer-based, auditing and accounting Planning and Budgeting — Predicting courses designed not only to prepare can­ update course. This cutting-edge course the Company’s Future (No. didates pursuing the PFS designation, but focuses primarily on new pronouncements 731440CPA07). Give your company a also to provide practical information for that will become effective during the upcom­ competitive edge. Develop a better under­ all CPAs seeking to enhance finan­ ing audit cycle. Receive this new CD- standing of the problems encountered in cial planning skills through quality ROM twice a year and earn a recom­ preparing business plans and budgets. continuing education. In addition to mended 4 hours of CPE credits. Learn useful techniques for generating concisely written text, study ques­ CPE Return the complete course within 60 broader organizational involvement in the tions are included that will enable news days of receipt and pay nothing or budgeting process. Implement a system of readers to apply concepts. The keep it and be billed automatically. checks and balances for evaluating budget courses in the series were developed by a Course Level: Update. Price: $75/edition results. Course Level: Intermediate. nationally recognized financial services member, $90/edition non-member. Recommended CPE credit hours: 8. Price: training expert, in conjunction with finan­ $119 member, $149 non-member. cial planning experts from the CPA com­ Controllership: Leading Edge of munity. Here are the first two courses. Corporate Performance (Text No. Negotiating Debt and Equity Financing PFS Exam Review Series: Financial 730440CPA07; CD-ROM No. (No. 730580CPA07). Understand which Planning Process and Risk Management 738440CPA07). To excel, the corporate con­ sources of financing fit your company’s situ­ (No. 730805CPA07). This course will troller has to understand the changing needs ation. Structure and negotiate the most cost- introduce the personal financial planning of senior management, investors, creditors effective debt and equity package. Build in process as well as personal risk manage­ and customers. Harness the information age, advantageous repayment, refinancing or ment through insurance. Topics include negotiate transactions and control product restructuring options. This program provides creating the process, communication skills, and workflow. Manage process and people, practical advice for evaluating alternative regulatory and ethical considerations, and quality and service. Learn state-of-the-art sources of funding. Course Level: Basic. time value of money. Also, learn to analyze techniques, both quantitative and qualitative. Recommended CPE credit hours: 8. Price: client data with an eye towards identifying Course Level: Intermediate. Recommended $119 member, $149 non-member. strengths and weaknesses in a client’s CPE credit hours: 8. Price: Text - $119 financial situation. Course Level: member, $149 non-member; CD-ROM - Current Developments in Business Law Intermediate. Recommended CPE credit $129 member, $161 non-member. (No. 730495CPA07). Using actual court hours: 8. Price: $119 member, $149 cases, this course constructs a practical set non-member. Financial Statement Analysis: Basis for of do’s and don’ts to avoid costly litigation. PFS Exam Review Series: Investment Management Advice (No. 731240CPA07). Based on “real world” advice, build a viable Planning (No. 730815CPA07) addresses More and more, clients are turning to CPAs defense, when all else fails. Course Level: investment planning with topics that include for advice on financial performance. All Update. Recommended CPE credit hours: 8. investment analysis, selection, allocation, practicing CPAs will profit from this course, Price: $119 member, $149 non-member. and monitoring as well as exploration of which presents the financial statements as a investment categories. Gain the skills to ana­ set of dynamic instruments that can be used lyze and monitor investment performance in for accurate, relevant and timely financial the context of a comprehensive financial decisions. The focus is not on the ratios used To order, write: AICPA Member plan. Course Level: Intermediate. to analyze the statements but on the eco­ Satisfaction Team, CPA07, P.O. Box Recommended CPE credit hours: 8. Price: nomic and financial conditions that caused 2209; Jersey City, NJ 07303-2209; fax, $119 member, $149 non-member. the statements to change. Financial 800/362-5066; call 888/777-7077 Statement Analysis helps CPAs understand (8:30 a.m. to 7:00 p.m., ET); or e-mail The Practitioner’s Update (Summer 2000 how clients develop liquidity, debt and prof­ [email protected]. Prices do not Edition) (CD-ROM No. 738111CPA07; itability problems. Course Level: Basic. Include shipping and handling. Have Demo No. 738116CPA07). Keep on top of Recommended CPE credit hours: 8. Price: membership number ready. the latest standards with this interactive, $119 member, $149 non-member.

Reprint Permission Form for AICPA Publications Available from Fax Hotline, Web Site and Dedicated Phone Number Members who wish to reprint an article from any AICPA publication Dial 201/938-3787 from a fax machine; document no. 1975 (or its Web site) must first obtain copyright permission from the Institute. You can easily obtain a copyright permission form by using www.aicpa.org/cpyright.htm our 24-hour faxback system, calling the Copyright Permissions Line, or visiting AICPA Online. Allow adequate time (up to two weeks) 201/938-3245 for processing the request and obtaining a written response. 10T he C P A L e t t e r • Ju l y /A u g u s t 2 0 0 0

American Arbitration Association Seeks CPA • Candidates who are selected by the team of CPA arbitrators are nominated for appointment to the AAA. Panelists • Nominated CPAs complete an application sent to them by the The American Arbitration Association and the AICPA are offering AAA and pay a $150 filing fee (regularly $300). qualified CPAs an opportunity to provide alternative dispute reso­ • The AAA processes the application and appoints the candidate lution services. Each year the AAA provides administrative ser­ to an industry arbitration panel. vices to thousands of business people to resolve disputes with • Within six months of being accepted to the panel, the arbitrator vendors, customers and employees. In many of these cases the must successfully complete a 24-hour course consisting of 8 parties would benefit if the panel included an arbitrator with hours of home study and 16 hours of classroom participation in accounting and financial knowledge. a workshop setting. In rare cases, the AAA may determine that Furthermore, with more than 100 different industry panels, the an individual does not have the temperament for arbitration AAA and the AICPA have joined to expand the roster of neutrals based on their observation of the person’s role-play in the with CPAs who have broad knowledge of a particular industry workshop. and have extensive, in-depth experience in providing professional • In the second year of panel membership, the panelist must suc­ services to it. For those in a developed industry niche, there is a cessfully complete a 16-hour practicum on advanced case good chance an AAA panel will match your knowledge and expe­ management techniques. rience. Once a person is on the AAA’s roster of neutrals, that person’s In addition to demonstrating expertise in a particular industry, name is included on lists of panelists that the AAA sends to par­ a good arbitrator candidate must possess sound judgment, high ties in dispute. The parties select the arbitrators from the lists. The integrity and a judicial temperament. Previous experience as an AAA makes the selection only if the parties cannot agree. All arbitrator is not required. The process for applying to be an arbi­ AAA arbitrators set their own fee, which is included in the infor­ tration panelist includes the following: mation sent to parties. • The individual submits a detailed resume to the AICPA by If you would like to be considered for AICPA nomination to be Sept. 1, 2000, for consideration by an evaluation team of vol­ an arbitration panelist with the AAA, mail a detailed resume as unteer CPA arbitrators. The resume must clearly describe the previously described to Monte Kaplan, AICPA, Consulting candidate’s history and experience as a CPA and provide in- Services Team, 1211 Avenue of the Americas, New York, NY depth information about the individual’s experience in provid­ 10036. If you have any questions, contact him by calling

ing services to a particular industry. 212/596-6061 or e-mailing [email protected].

DRS SRIE REQUESTED SERVICE ADDRESS

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Postage Paid at at Paid Postage Periodicals Periodicals September 2000 Vol. 80 No. 7 AThe News Report to Members CPA Letter SEC Proposes Sweeping Rules; Ripple Effect Could Impact Firms that Audit Private Companies

Putting the very future of the CPA profes­ client. Such a drastic measure would cripple A sion on the line, the Securities and even smaller firms. merican Highlights Exchange Commission in late June pro­ While the AICPA has supported other posed sweeping rules that, if enacted in their SEC initiatives to focus attention on the current form, would force a importance of auditor indepen­

I 2 Personal Financial restructuring of the accounting dence, the SEC’s new proposals nstitute Specialist Exam to Be profession. The most threaten­ re g u latory are draconian and unwarranted, Given November 17 ing rule would prohibit especially given the conclusions accounting firms performing matters of the independent Panel on

O 2 audits for SEC registrants from Audit Effectiveness which was Have Instant Access to providing most non-audit services for those formed by the Public Oversight Board at the C f AICPA InfoBytes clients or any of their affiliates. SEC’s request. In its draft report issued this Going one step further, however, the June, the panel concluded that it found no ertified 3 Institute believes that the ripple effect of instances where providing non-audit services AICPA Amendment Added state boards of accountancy, the Department to an audit client had a detrimental effect on

P to House Bill to Set Up of Labor, the General Accounting Office, the quality of the audit. In fact, in one-fourth Privacy Commission federal banking regulators, and other agen­ of the audit engagements it reviewed in ublic cies adopting similar rules to “harmonize” which consulting services also were pro­ 4 with the SEC would in essence make its rule vided, the services were found to have a posi­ A First XML Specification applicable to all accounting firms that pro­ tive impact on the effectiveness of the audit.

s t n a t n u o c c Released for Financial vide both audit and non-audit services to a continued on page 6 Statements 5 Proposed Global Professional Business “Chair’s Comer” Designation Initiative Continues to Move Ahead 5 Online Corporate Steady, swift progress over the past several or neutral in a linguistic assessment with Governance Seminar to Be months on the proposed global profes­ target markets and works across all target Offered in November sional business designation has brought languages. the initiative to a critical point. Later this 8 month the volunteer leadership of each of Defining the Cognitor Designation Highlights of Board of the eight accountancy institutes will The proposed Cognitor designation will Directors’ July Meeting review the business plan and basic policies of the proposed new designation. be defined by four critical characteristics Among other actions to bring the initia­ that make it uniquely positioned in the tive closer to fruition, the market marketplace: researchers have recommended a name. • Global in reach. Since the designation would signify some­ • Based on a wide range of disciplines. one who skillfully uses and integrates • Bound by a global standard of ethics. knowledge from many disciplines, a word • Based on a global standard of compe­ that would demonstrate such ability has tency, with a commitment to continuing been suggested. Independent global learning and periodic assessment to research and name testing put “Cognitor” ensure currency of knowledge and skills. at the head of the pack. “Cognitor” conveys the attributes of International interpretation is a critical higher thinking and solutions-oriented, is component because not only are eight timeless and memorable, and tests positive continued on page 6 2 The CPA L etter • S eptem ber 20 0 0

Personal Financial Specialist library designed to help members enhance were mailed recently to AICPA members. and update their professional knowledge Any member who did not receive the Exam to Be Given November 17 and fulfill CPE requirements. If you pur­ brochures or who desires additional infor­ Join the more than 2,700 CPAs already chased an annual subscription to AICPA mation should write: Aon Insurance using the Personal Financial Specialist InfoBytes through your dues bill (at the Services, One Whitehall Street, New York, designation, awarded to members who low fee of $95 per year), you can access NY 10004, or: the online learning library immediately by have demonstrated their competency and 800/223-7473 experience in providing personal visiting http://infobytes.aicpaser- vices.org and registering as a First financial planning services. The www.cpai.com PFS designation will allow you to n e w s Time User. If you have not yet pur­ distinguish yourself as a CPA who chased a subscription to the online specializes in PFP and will provide briefs learning library, you can order CPA Letter Supplements and you with the competitive edge of online at the Web address above or Practice Alert 00-3 Available holding a designation offered exclusively call 888/777-7077. to CPA Personal Financial Planners. AICPA InfoBytes is a convenient “just- To obtain any of the member-segment sup­ Members interested in earning the in-time” learning resource consisting of plements or Practice Alert 00-3 produced Personal Financial Specialist designation one- and two-hour National Association of this month with The CPA Letter. can take the next exam on Nov. 17 at one State Boards of Accountancy-approved of more than 250 test sites nationwide. The interactive CPE self-study segments, total­ Dial 201/938-3787 from a fax Chauncey Group International, of which ing more than 1,100 hours of training and machine and key in document nos.: Sylvan National Testing Service Group is a resources. large firms, 1550; medium firms, 1551; subsidiary, administers the PFS examina­ Use this online library as a reference small firms, 1552; business and industry, tion. AICPA members who have at least tool when you need to solve a problem and 1553; internal audit, 1554; government, 250 hours of experience in PFP activities are looking for instant guidance. All one- 1555; and education, 1556. For Practice in each of the three years prior to register­ and two-hour segments allow you to com­ Alert 00-3 (see page 3 for description), key ing for the examination can become PFS plete them in their entirety for CPE credit, in 1566. candidates by calling Sylvan at or just review specific topics for educa­ www.aicpa.org/pubs/cpaltr/index.htm 800/864-8080. Registration is available tional purposes. only through this telephone number; there http: //infobytes.aicpaservices.org is no application to complete. The registra­ tion period is Sept. 18 through Oct. 20. For more information on the PFS desig­ $100 Billion Mark Surpassed PUBLIC MEETING NOTICES nation, call the AICPA at 888/777-7077 by AICPA Insurance Trust and ask for the PFS Candidates Handbook For detailed agendas, dial (No. G00055CPA09), or visit Life insurance in force under the AICPA 201/938-3787 from a fax machine and www.aicpa.org/members/div/pfp/pfsa.htm. Insurance Trust has increased by more key in document no. 1206 two weeks Two self-study review courses are avail­ than $1 billion since Jan. 1, 2000, bring­ prior to these meetings. able to prepare candidates pursuing the des­ ing total coverage in force to more than ignation. “Financial Planning Process and $100 billion. Only some 3% of the life Accounting & Review Services Risk Management” (No. 730805CPA09) insurance companies in the United States Committee: Nov. 30-Dec. 1, and “Investment Planning” (No. have more volume in force, according to New Orleans 730815CPA09) can be obtained from the leading industry publications. Accounting Standards Executive Member Satisfaction Center (see page 7; The maximum amounts of life insurance Committee: Sept. 12-13, New York; price: $119 member, $149 non-member). available are $2 million under the life insur­ Oct. 24-25, New York ance programs for individual CPAs and Auditing Standards Board: Sept. Have Instant Access to AICPA their spouses, and $500,000 under the 26-28, Newport Beach, Calif. Group Insurance Plan for owners and InfoBytes employees of public accounting firms. Other Meetings This past summer the Institute launched Invitations and descriptive literature Peer Review Board: Oct. 2-3, AICPA InfoBytes, a new online learning concerning the life insurance programs Williamsburg, Va.

The CPA Letter (ISSN 0094-792x) September 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] S eptember 2000 • T he CPA L etter3

Practice Alert 00-3 Issued on Auditing Exposure Draft of Proposed Statement of Construction Contracts Position Released on Investment Partnerships Practice Alert 00-3, Auditing Construction Contracts, has been The AICPA’s Accounting Standards Executive Committee has issued. This Alert documents “best practices” for auditing con­ issued an exposure draft of a proposed statement of position, struction contractors and companies using the percentage-of-com­ Amendment to Scope of Statement of Position 95-2, Financial pletion method of accounting. Reporting by Nonpublic Investment Partnerships, to The alert is included in copies of this newsletter Include Commodity Pools. The proposed SOP would being mailed to members in public accounting. accou n tin g include investment partnerships that are commodity Members in other segments wishing to obtain a copy pools subject to regulation under the Commodity should visit www.aicpa.org/pubs/cpaltr/index.htm (go & auditing Exchange Act of 1974 in the scope of SOP 95-2. A to the Sept. 2000 issue) or dial 201/938-3787 from a news final SOP would be effective for financial statements fax machine and key in document no. 1566. issued for periods ending after June 15, 2001 (though All previously issued Practice Alerts have been updated for earlier adoption is encouraged). Comments are due Nov. 15. To professional literature that has been issued subsequent to the obtain a copy of the exposure draft, visit the accounting standards issuance of the original Practice Alert. The updated Practice Alerts section of the AICPA Web site: can be found on the SEC Practice Section’s page of the AICPA www.aicpa.org/members/div/acctstd/edo/index.htm Web site at www.aicpa.org/members/div/secps/lit/practice.htm.

Congress Includes AICPA GST Tax push to have the GST tax proposal added the sale of small businesses. AICPA Key Proposal in Estate Tax Bill; Other to the budget reconciliation measure. Persons joined the torrent of Americans Institute-Backed Changes Poised for Several other initiatives in which the early this year urging Congress to reverse its Action AICPA has played an instrumental role are action to effectively eliminate the use of the Congress included the pro­ included in legislation to installment method of accounting for most posal the AICPA helped increase the minimum wage accrual method taxpayers. develop to modify the genera­ that is poised to pass Congress. tion skipping transfer tax in One is the measure the Institute AICPA Amendment Added to House Bill its bill to repeal estate taxes. helped develop to allow to Set Up Privacy Commission Unfortunately, that does not employers to offer retirement- The House is set to consider a bill to estab­ mean problems related to the GST tax are planning services to their employees without lish a “Commission for the Comprehensive about to be solved. President Clinton has the cost of those services being taxable to Study of Privacy Protection” that includes vowed to veto the bill, and there does not the employee. The other is a provision that an AICPA amendment requiring the appear to be enough votes for the bill in would reinstate the installment method of Commission to report on third-party verifi­ the House and Senate to override a veto. accounting for accrual basis taxpayers. The cation as an enforcement mechanism. However, GOP congressional leaders are installment method change that became law Third-party verification means that an considering rolling estate tax relief into a in late 1999 became a boomerang for objective third party examines a business’ budget reconciliation bill Congress proba­ Congress almost immediately when it privacy policy to make sure that its privacy bly will consider in Sept. The Institute will became apparent that the change was killing continued on page 7

Two New Conferences Offered on Eldercare and Technology AICPA/CICA Technology Assurance Conference. This new Assurance conference will offer insights and strategies on information technol­ AICPA/CICA ElderCare Conference. Every year more and more ogy assurance and consulting opportunities. Add SysTrust and people are living longer. To find out how to grow your prac­ WebTrust to the valuable services you can offer to be com­ tice by providing needed services to this growing market, petitive in today’s economy. The conference will take place come to the AICPA/CICA ElderCare Conference being held Oct. 26-27 at Disney’s Contemporary Resort in Orlando, on Oct. 26-27 at Disney’s Contemporary Resort in Orlando, CPEFla. Recommended CPE credit: 16 hours. Register by Sept. Fla. This new conference will provide you with indispensable new s26 to receive the early bird rate of $645 member, $745 non­ tools and strategies for developing your own highly profitable member (a saving of $50). ElderCare practice. Recommended CPE credit: 16 hours. Register For more information, or to register, contact the Member by Sept. 26 to receive the early bird rate of $645 member, $745 Satisfaction Center (see page 7) or visit www.aicpa.org/confer- non-member (a saving of $50). ences.

legislation 4 The CPA L etter • S eptember 2000

First XML Specification Released for Financial Statements The first extensible Markup Language dence, full interoperability, and reliable ment as a Web page, XBRL for Financial specification for Business Reporting for extraction of financial information. Statements meets these needs and leverages U.S. commercial and industrial companies More than 80% of major public compa­ efficiencies of the Internet as today’s pri­ was released on July 31. With nies provide some type of mary source of financial information. the release of XBRL fo r financial disclosure on the A steering committee consisting of more Financial Statements, both technology Internet. As a result, investors than 50 companies and organizations from public and private companies need accurate and reliable around the world, including the AICPA, can begin to incorporate financial information that can developed the specification. Steering com­ XBRL (extensible Business be delivered promptly over the mittee membership is an ongoing process, Reporting Language) into their financial Internet to help them make informed finan­ with new organizations and companies con­ reporting processes and immediately real­ cial decisions. By allowing for the creation tinually joining the initiative as other indus­ ize some of its major benefits. Among of financial statements using XBRL and try sectors begin development of XBRL those benefits are a streamlined financial providing for browser-based style sheets to specifications. For more on XBRL, visit reporting process, technology indepen­ render the financial statement XML docu­ www.xbrl.org.

As a result of an investigation of alleged violations of the Code of —Terminated following revocation of his CPA certificate/license Professional Conduct of the AICPA, the following ethics case has by his state board of accountancy: been resolved by settlement agreement under the Joint Ethics • Paul E. Nietzel of Omaha, Neb., effective May 10, 2000. Enforcement Program: • David E. Stevenson of Manchester, Mich., expelled June 13, Details on these disciplinary actions can be accessed through: 2000. □ www.aicpa.org/pubs/cpaltr/index.htm

As a result of decisions by hearing panels of the Joint Trial Board, the following members have had their AICPA memberships: Finns Terminated from Peer Review Program —Terminated: Effective May 2, 2000, the following firms were terminated • Charles Bruce Calkins of Jersey City, Tex., effective from the AICPA peer review program for failure to cooperate June 7, 2000. with the AICPA Peer Review Board. Hearing panels • Kenneth A. Eiserman of Libertyville, Ill., effec­ deemed that these firms did not complete the correc­ tive July 1, 2000. tive or monitoring actions required as a condition of d • Michael Andrew Goldberg of Boca Raton, Fla., isciplinary acceptance of the firms’ most recent peer reviews. effective June 7, 2000. actions The firms are: Tadd A. Black, CPA, of Hugoton, • Fred L. Gonser of Macon, Ga., effective Kan.; Frano & Frano CPAs Inc. of Braintree, Ma.; June 7, 2000. Karen E. Habert, CPA, of Duluth, Minn.; and David L. • Arthur J. Grant of Morris Plains, N.J., effective June 16, 2000. Snyderwine Co. of Bath, N.Y. • Douglas J. Horvey of Arvada, Colo., effective July 1, 2000. Effective May 2, 2000, the firm of England and Company of • Donald D. Kain of Knoxville, Iowa, effective July 1, 2000. Houston was terminated from the AICPA peer review program • Pamela Stewart Wamsley of De Bary, Fla., effective for failure to cooperate with the AICPA Peer Review Board. June 7, 2000. Hearing panels deemed that the firm did not submit a copy of • Ralph H. Zakerski of Dearborn Heights, Mich., effective the report, letter of comments and letter of response on the July 1, 2000. firm’s most recent peer review. • Frank L. Zeijav of St. Louis, effective July 1, 2000. Effective May 16, 2000, the following firms were terminated from the AICPA peer review program for failure to cooperate —Admonished: with the AICPA Peer Review Board for the reasons noted. The • Mark Philip Stanton of Palatka, Fla., effective June 7, 2000. firms waived their rights to hearings. • Failure to submit a copy of the report, letter of comments Under the automatic disciplinary provisions of the Institute’s and letter of response on the firm’s most recent peer review: bylaws, the following members have had their AICPA member­ Daniel Barnard Smith, CPA, of Garden City, N.Y. ships: • Failure to complete corrective or monitoring actions required —Terminated because of final judgments of conviction for crimes as a condition of acceptance of the firms’ most recent peer punishable by imprisonment for more than one year: reviews: Anderson & Co. of Bremen, Ind.; Rebecca S. • Ralph K. Bazuro of Floral Park, N.Y., effective Apr. 4, 2000. Cochran, CPA, of Decatur, Ind.; Kenneth L. Juilfs P .C. • Carl F. Kossmeyer of St. Louis, effective May 30, 2000. of Lincoln, Neb.; and Dennis K. Mishler, CPA, of • Robert K. Hobbs of Louisville, Ky., effective May 17, 2000. Nappanee, Ind. S eptember 2000 • T he CPA L etter 5

(managers and two-thirds of a century investors) forces us to Wise Regula­ ago—before the digital rethink our own market­ decisions tory forces computer, the Internet, place. The situation can online securities trading, be simplified and the effective global­ graphically (see Knowledge ization of the capital c h air's figure). The busi­ markets. Such changes ness information demand innovation, but c orner value chain starts Information CPAs antiquated regulations with business hinder it. events and ends with The accounting profes­ wealth-creating deci­ sion is now at a crucial Data sions. Higher activities point in its history: (running a company) are Which of the opposing By Robert K. Elliott, CPA exponentially more Market forces will prevail? Will Chair, AICPA Board of Directors Events and valuable than lower transactions forces regulatory forces prevail The New Economy can be dated from the ones (data entry). CPAs and reduce us effectively invention and subsequent miniaturization are licensed to attest to to statutory auditors? of the semi-conductor, resulting in cheap financial statements—the middle of the Will market forces prevail and open vast and abundant information. This informa­ value chain—though we certainly do far new economic potential for our profes­ tion dramatically improves coordination in more than just the job that we’re licensed sion? Or will the forces stalemate, leaving virtually every facet of our lives: to do! Market forces (technology and cus­ us in a protracted conflict? • Political power has shifted from gov­ tomer demands, as reflected in our Vision The question is crucial to all CPAs, ernments to citizens—with a world­ and the “XYZ” designation project) are whether in industry, government, education, wide outbreak of democracy and mar­ pushing us up the chain while regulatory practice firms that audit SEC registrants, or ket economies. forces would confine us to the licensed practice firms that don’t audit SEC regis­ • Military power has flowed from the function. trants. Regulatory constriction of one mem­ brutally strong to the technology These conflicting forces are typical in ber segment will ultimately cramp all. savvy. regulated industries. Market forces, rooted CPAs need to understand the dynamics • Well-informed markets better allocate in technology, make old regulations obso­ of this situation—the parlous inflection resources—reducing waste and lete. They can be repealed or modernized point at which we find ourselves, and the increasing wealth. to the benefit of economic progress (cf. necessity for coordinated and forceful • Consumers have seized power from transportation, telecommunications and action to modernize regulation so we can producers—improving quality, usabil­ financial services), or they can be left in seize the market opportunities. If we suc­ ity and customer satisfaction. place or made more rigid, even without ceed, we will better serve the public inter­ These forces have radically reshaped evidence or demonstrable cause, leaving est and bequeath to our successors a pro­ companies, markets and countries—in industries less adaptable and therefore fession strengthened, ennobled and invig­ other words, the world we now live in. vulnerable to obsolescence. orated rather than enervated, demoralized Now consider our own neighborhood. Existing regulatory regimes originated and diminished. A shift of power from producers of finan­ in the industrial era. For example, the core [email protected] cial information (CPAs) to consumers laws enforced by the SEC were written

Online Corporate Governance Seminar to Be • SEC proposed rules regarding insider trading. Offered in November • Managing corporate earnings, including communication between the company and analysts and dealing with extended With “Implementing Good Corporate Governance” as its theme, trading hours. an online seminar series is being offered by law.com through the • High technology “dot com” boards. AICPA. Staring on Nov. 6 and running through Nov. 17, the Web- • Proxy voting over the Internet. based program will offer presentations on the following topics: • Issues facing boards, including diversity and director and • Investor relations and the corporate secretary, focusing on how executive compensation. to improve communication with investors and using technol­ Recommended CPE credit: 3 hours. Early bird registration fee: ogy to communicate. $89 (must register by Oct. 6 to receive the $20 discount). For • Protecting a deal—recent developments in Delaware law. more information or to register, visit www.law.com and mention • SEC merger and acquisition rules regarding communication AICPA. and selective disclosure. 6 The CPA L e t t e r • S e p t e m b e r 2000

continued from page 1 — SEC Proposes Sweeping Rules 1978, but revoked in 1982. The proposal would require a company Ten categories of non-audit services were specified by the SEC to disclose in its annual proxy statement any service received from as being off limits under the proposed rule: (1) bookkeeping or its principal accountant, unless the amount of such service was other services related to the audit client’s accounting records or less than the lesser of $50,000 or 10% of the audit fee. financial statements; (2) financial information systems design and Extensive discussion of the SEC’s proposals took place at the implementation; (3) appraisal or valuation services, fairness opin­ AICPA Board of Directors’ meeting in July. The board concluded ions or contribution-in-kind reports; (4) actuarial services; (5) that modernization of the rules relating to financial interests and internal audit outsourcing; (6) assumption of decision-making, family relationships was needed and overdue, but that the pro­ supervisory or ongoing monitoring functions; (7) human posed restrictions on non-audit services were not in the public resources; (8) broker-dealer, investment adviser or investment interest, as they would strip the profession of skills needed to meet banking services; (9) legal services; and (10) expert services. its auditing responsibilities in the New Economy. In addition, the Moreover, the SEC proposes to reserve the right to prohibit Independence Standards Board has been working on financial still other services, by applying both broad “catch-all” provisions interests, family relationships and employment with clients for a and an “appearance”-based standard, under which an accountant number of months. The ISB's process, which the AICPA supports, will not be recognized as independent if the accountant “would includes public participation, and the Institute believes the ISB is not be perceived by reasonable investors to be...capable of exer­ the appropriate body to set independence standards for auditors of cising objective and impartial judgment....” Because of resulting public companies. Add to that the findings of the Panel on Audit uncertainties as to what is or is not permitted, firms of all sizes Effectiveness and the potential impact on firms of all sizes, and may feel compelled to avoid or discontinue particular services the board instructed the AICPA to make every attempt to prevent altogether, even if that service is not expressly prohibited. adoption of the rules as proposed. In addition, the proposed rule would impute to an accounting To that end, the AICPA will testify before the SEC at a hearing firm the activities of virtually any entity with which the account­ on the proposed rules on Sept. 13. More importantly, the Institute is ing firm has a commercially valuable business relationship by mobilizing the grassroots support of its membership to speak out deeming such an entity an “affiliate of the accounting firm.” against this intrusive proposed regulation. Members of the SEC Accounting firms, therefore, would be precluded from entering Practice Section and the Private Companies Practice Section, mem­ into almost any joint venture or partnership, since the firm’s inde­ bers in business and industry, and Key Person, Political Leadership pendence could be impaired as a result of the activities of other Cabinet and state CPA society contacts are encouraged to contact parties in which it may have only an immaterial investment, or the SEC and members of Congress during the proposal’s comment with which it may be associated in only limited respects, but does period. All of the communications materials prepared for the cam­ not control. What’s more, regional alliances or cooperative agree­ paign—a letter to members, a summary of the proposals, instruc­ ments between accounting firms could result in each firm being tions for commenting, and message points—are available on the required to be independent of each other firm’s clients. The AICPA Web site (www.aicpa.org/belt/sec/letter.htm). restrictions similarly would extend to any alliance or cooperative You may want to consider the proposals and comment as agreement with overseas accounting and other firms (such as legal well—the comment period ends on Sept. 25. To read the proposal service providers). in its entirety, view it on the SEC’s Web site at Another significant provision of the proposed rule is a new dis­ www.sec.gov/rules/proposed/34-42994.htm. closure requirement for public companies that would reinstate a We will keep members informed about the proposal’s develop­ proxy disclosure rule similar to one put into effect by the SEC in ments and our progress through future reports in The CPA Letter. continued from page 1 — Global Designation offers those who are pioneers many accounting practitioners are in an excel­ accountancy organizations in different more possibilities and much more oppor­ lent position to offer the knowledge inte­ countries part of the current con­ tunities than those who come later. gration, complex problem solving, and sortium, but other countries Sporting an emblem that provides higher levels of value needed by busi­ around the world are being briefed news assurance of one’s ability to give ness organizations. Having had exposure on the designation to determine strategic business advice, to many industries and work experience whether they want to join in this update “Cognitors” will reap the rewards with other types of professionals and unparalleled global venture. In of offering a much-demanded ser­ specialists in a wide range of fields, fact, on the same dates as the Sept. meet­ vice that is at the top of the value chain CPAs are ideally suited to build on the ing of volunteer leaders, representatives in the evolving information economy. current hallmarks of the profession to from France, Germany, Hong Kong, No such designation is in existence stake out territory in this new frontier. Italy, the Netherlands, and Japan will today. Stay tuned to The CPA Letter for hear about the initiative. For CPAs, the suggested “Cognitor” much more on this proposed designation. Being at the forefront of a new desig­ designation provides an opportunity to nation that is unique in the market­ play a growing leadership role in the [email protected] place—in essence a new profession— emerging New Economy. Experienced S eptember 2000 • The CPA Letter7

AICPA Professional Standards (No. useful techniques and procedures for con­ Depreciation Solution (No. 005100CPA09) brings together the out­ ducting audit, review and compilation 016157hsCPA09) allows you to maintain standing pronouncements on professional engagements, from planning to internal con­ asset data and generate reports to assist standards issued by the AICPA, the trol to accountants’ reports. Also included clients with asset management and tax International Federation of Accountants and are valuable practice aids, such as sample compliance. Asset data is shared with the International Accounting Standards confirmation, engagement and representa­ Creative Solutions’ Write-Up Solution and Committee. The pronouncements are tion letters, audit programs, internal control UltraTax products so, at year-end, the data arranged by subject, with amendments noted checklists and much more. is automatically available to and superseded portions deleted. This edi­ Price: $80 member; $100 non­ speed up year-end process­ tion includes all outstanding standards on member. now ing and tax return prepara­ statements issued through June 1, 2000, tion. The intuitive point-and- including AICPA Statement on Auditing AICPA Technical Practice available click navigation found in the Standards No. 91, Federal GAAP Hierarchy, Aids (Including Statements of _____ powerful 32-bit Depreciation and Statement on Quality Control Standards Position) (No. 005130CPA09) contains all Solution helps you get through the system No. 5, The Personnel Management Element outstanding statements of position and prac­ quickly and efficiently while minimizing of a Firm’s System of Quality Control— tice bulletins issued through June 1, 2000, the learning curve for you and your staff. Competencies Required by a Practitioner- including SOP 00-1, Auditing Health Care Depreciation methods within the soft­ in-Charge of an Attest Engagement. Many Third-Party Revenues and Related ware include MACRS, ACRS, Straight- sections of Professional Standards have Receivables. Price: $80 member; $100 non­ Line, 200/150/125% Declining Balance, been indexed for effortless data retrieval. member. Sum-of-the-Years Digits, Units of Price: $109 member; $136.50 non-member. Production, Amortization, and up to 99 Special Savings—save $42. AICPA user defined methods. Depreciation FASB Accounting Standards—Current Professional Standards and FASB Solution also includes 6 depreciation Text (No. 005120CPA09) includes current Accounting Standards—Current Text (No. treatments. (There will be a total of 10 accounting standards through FASB 005150CPA09). Price: $169 member depreciation treatments in the Fall 2000 Statement No. 137. Arranged by subject and (available only to AICPA members). release of Depreciation Solution.) 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For additional product/technical infor­ mation, call the software support team at FASB Accounting Standards—Original Double Digit Growth: Tools from Top 800/968-0600 (listen for Depreciation Pronouncements (No. 005110CPA09) Firms (No. 090465CPA09). Find out how Solution at menu options). Price: $1,100 contains the original text of accounting 12 CPA firms have had double-digit member; $1,210 non-member (includes 60 standards pronouncements with super­ growth every year for the past several days free maintenance and support). seded sections and amendments clearly years. Learn what programs or processes noted. This edition has been updated for they used, and what strategies and tools all pronouncements issued through June 1, were implemented. See how a strategic To order, write: AICPA Member 2000, including FASB Statement No. 137, plan and focus can lead your firm to peak Satisfaction Team, CPA09, P.O. Box Accounting for Derivative Instruments and performance—and take away a thorough Hedging Activities. Price: $102 member; understanding of each firm’s “secret for­ 2209, Jersey City, NJ 07303-2209; fax not available to non-members. mula” for success. This unique publication 800/362-5066; call 888/777-7077 (8:30 gives you practical advice and brainstorm­ a.m. to 7:00 p.m., ET); or e-mail mem­ AICPA Audit and Accounting Manual (No. ing ideas, access to your peers’ experi­ [email protected]. Prices do not include 005140CPA09). Developed exclusively for ences and knowledge, and marketing and shipping and handling. Have member­ small- and medium-sized practices, this management tools and program ideas. ship number ready. unique manual explains and demonstrates Price: $36 member; $45 non-member. continued from page 3 — Privacy Commission ment to the bill (H.R. 4049) before clearing the bill for a vote by the claims are true. The AICPA asked for the amendment to be added full House. If H.R. 4049 becomes law, the Commission would also because CPA WebTrusfm is an example of a third-party verification study a broad spectrum of privacy issues—online privacy, identity program currently available in the private sector. The House theft, privacy in the workplace and the protection of health, medical, Government Reform Committee approved the Institute’s amend­ financial and governmental records. 8 The 8 CPA Letter • September 2000

Highlights of Board of Directors’ July Meeting • Was updated on developments related to the proposed new global professional business designation initiative. Among other actions at its meeting on July 13-14, the AICPA • Heard that an independent research effort found that the Board of Directors: 150-hour rule was not a barrier to students’ decisions to pur­ • Discussed the draft Report and Recommendations of the sue accounting degrees and careers in the profession. Public Oversight Board’s Panel on Audit Effectiveness and Students indicated that they considered graduate school expressed concern for many of the panel’s conclusions, mandatory but did not place the value on accounting educa­ while noting the need to keep the profession forward-look­ tion that they did on other tracks. ing, dynamic, able to react quickly to marketplace issues, • Received a report on AICPA Foundation activities. and able to serve the public interest by relying on profes­ sional judgment and effective self-regulation. • Discussed the proposed SEC Rule on Auditor Independence and Volunteers Needed to Grade CPA Exams concluded that, while the proposed modernization of rules relat­ ing to financial interests and family relationships were needed The AICPA is seeking CPAs to assist in grading future Uniform and overdue, the proposed restrictions on non-audit services CPA Examinations. The grading period for the exam, which is were too far-reaching and not in the public interest. The board given in Nov. and May, begins two to three weeks after the further concluded that the AICPA should attempt to prevent exam is administered and continues for about six weeks. adoption of the rule as exposed (see page 1). Graders must provide a minimum of three seven-hour days • Heard a presentation on a Total Value Creation project, which each week and will be paid at a rate of $15 per hour. The grad­ would provide Web-based, XBRL-enabled financial reporting ing facilities in the AICPA’s Jersey City, N.J., office will be that is tied to events and assumptions that are future-oriented. open seven days a week. CPA exam graders will receive 16 TVC would lead to continuous, real-time valuation that could be AICPA CPE credit hours. For additional information and an used to measure an organization’s success. application, write: AICPA, Grading Coordinator-DH-404, 201 • Discussed a proposal from the Assurance Services Team to Plaza Three, Harborside Financial Center, Jersey City, NJ pursue a joint venture to enhance the penetration of the 07311-3881; or e-mail [email protected].

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Periodicals October 2000 Vol.80 No. 7 AThe News Report to Members CPA Letter Board Endorses Proposed New Global Credential Initiative; Council Will Be Asked to Support Continued Development A merican At its meeting on Sept. 14-15, the AICPA case under the Institute’s bylaws if Council Highlights Board of Directors overwhelmingly were to act at this month’s meeting. It also approved a resolution demonstrating its calls for obtaining member and state CPA

I 2 enthusiastic support for moving for­ society response and authorizes the Image Enhancement ward with development of the proposed board and management to provide nstitute Campaign Continues; new global business credential. This j u such a credential, if approved by the Cooperative Advertising st resolution will be presented to Council membership, through a wholly Initiative Launches with for its vote later this month. owned subsidiary or affiliate.

O i n . . . State Societies The resolution, which reflects input In another development, a “white from the May Council meeting, provides for paper” describing the business drivers, bene­ C f 3 a program to educate members on the value fits, organizational and implementation ertified “Chair’s Comer” and benefits of the proposed credential as issues has been prepared and distributed to well as a vote at the Spring 2001 Council Council members and state CPA societies. 4 meeting to authorize a membership ballot on Members will continue to be updated on P Not-for-Profit the issue. This timing avoids a member vote the progress of this initiative in future issues Organizations: Reporting during tax season that would have been the of The CPA Letter. ublic on Prior-Year Summarized

A Information

s t n a t n u o c c 4 AICPA Challenges SEC on Proposal to Prohibit SAS No. 92 on Auditing Audit Firms from Providing Non-Audit Services Derivatives and Securities Issued SEC Admits Lack of Facts or Evidence to Support Contentions of Compromised Audit Quality or Auditor Independence 5 At a hearing on Sept. 13 in N.Y., AICPA rep­ a second day of testimony scheduled for Tax Executive Committee resentatives criticized the short comment Sept. 21 in Washington, D.C. Adopts Enforceable period — a measly 75 days — imposed by Besides criticizing the deliberation Statements on Standards the Securities and Exchange Commission on process, the AICPA challenged the substance for Tax Services its proposed rule on auditor independence of the proposed rule, citing a host of reasons 5 (The CPA Letter, Sept.). The truncated com­ to aggressively fight it with all its means. ment period was especially troubling given In strongly worded written testimony Exposure Draft for the complexity and breadth of a proposed explaining why the proposals are unneces­ WebTrust Program for rule that, if enacted in its present form, sary and unwarranted, Melancon high­ Online Privacy Allows would change the landscape of the account­ lighted the AICPA’s regularly updated inde­ Early Adoption ing profession. pendence rules, interpretations and ethics 7 “The proposal collapses a ‘concept rulings; the requirement that firms who release’ and a specific rulemaking proposal audit SEC registrants be members of the Survey Measures AICPA into the same process, a highly unorthodox SEC Practice Section, which has adopted Members’ Perceptions of approach to regulation,” said AICPA quality control requirements designed to Various Retirement President & CEO Barry Melancon. “Frankly, promote both audit quality and auditor Products it is hard to reconcile the commission’s pur­ independence; and a self-regulatory system ported open mind on these alternatives with that focuses on protecting the public inter­ many of the statements in its proposal, the est in reliable financial information and specificity of the rules it has proposed and enhancing the credibility of financial its allowance of only 75 days for comment.” reporting through the audit. He added that In response, the SEC offered the profession continued on page 8 2 2 The CPA L e t t e r • O c t o b e r 2000

Send Us Your E-Mail Address using national network radio. IRS Recruiting Treasury In prior years, radio advertising had Enforcement Agents If you have not submitted your e-mail been placed exclusively by the state CPA address to us or have changed it societies. This year, the AICPA will The Internal Revenue Service is looking to recently, send your e-mail address purchase advertising time in news, fill Criminal Investigator (Special Agent) to [email protected]. Indicate “e- news talk, music and sports radio formats positions on a continuous basis. There are mail address update” in the subject on national networks to help numerous openings in various locations header field to help us process the briefs achieve efficient coverage of our throughout the country and in Puerto Rico. submissions more efficiently. Be key target audiences across the Interested individuals should visit: sure to include your full name, and, if country. The Institute is moving to radio www.treas.gov/irs/ci known, your membership number on the to determine whether this mode of adver­ e-mail message. Be assured the AICPA tising reaches a broader segment of the will not sell your e-mail address to out­ target audience and offers more exposure CPA Letter Supplements and side third parties. to our message. Practice Alert 00-04 Available At the same time, the AICPA is con­ Worldwide Conference on ducting a pilot cooperative advertising To obtain any of the member-segment sup­ Accountancy to Be Held in program with the state CPA societies. plements or Practice Alert 00-04 produced Jerusalem Through this arrangement, the AICPA is this month with The CPA Letter. providing matching funds to state soci­ Dial 201/938-3787 from a fax The 7th Jerusalem Conference on eties that choose to participate to further machine and key in document nos.: Accountancy, a worldwide gathering of expand their advertising placements. large firms, 1557; medium firms, 1558; accountants that is held every four years, Funding is being provided for the pur­ small firms, 1559; business & industry, will be held Dec. 3-6. Recognized chase of additional radio, print and exist­ 1560; internal audit, 1561; government, throughout the world as an important ing television advertising that increases 1562; and education, 1563. For Practice forum for exchange of ideas and discus­ spending in the state societies’ geographic Alert 00-04 (see description on page 7), sion of burning issues in the profession, markets and, therefore, steps up overall key in 1566. the conference this year will emphasize advertising at the state level. Early www.aicpa.org/pubs/cpaltr/index.htm globalization, multi-national conflicts and response from the states has been very the relationship between large and enthusiastic and a high percentage of medium/small practices. A number of societies are expected to participate. leaders of the accounting profession in See next m onth’s CPA L etter for PUBLIC MEETING NOTICES the United States will be included as a schedule of AICPA advertising speakers. placements. For detailed agendas, dial 201/938-3787 Registration fee: $620 (accompanying from a fax machine and key in document person $250). For more information, no. 1206 two weeks prior to these meetings. call the Secretariat in Israel at CPA/PFS Full-Page Ad to Accounting & Review Services 972-3-5140000, fax 972-3-5140077, Appear in Worth Magazine Committee: Nov. 30-Dec. 1, e-mail [email protected] or visit A full-page color advertisement educating New Orleans www.kenes.com/account2000. people about the value of working with a Accounting Standards Executive CPA/Personal Financial Planner will be Committee: Oct. 24-25, New York Image Enhancement Campaign appearing in Worth magazine’s Nov. and Auditing Standards Board: Nov. 14-16, Continues; Cooperative Dec. issues, as well as its “financial New York Advertising Initiative Launches advisers” issue in the spring. The infor­ Professional Ethics Executive with State Societies mational ad demonstrates how the Committee: Nov. 30-Dec. 1, Washington, CPA/PFS is the premier financial adviser D.C. The CPA image enhancement campaign is whom consumers should seek out when poised to continue, starting up again exploring personal financial planning Other Meetings within the next few weeks. For the first options. The ad appeared last year in the Council/Annual Members’ Meeting: time, the AICPA will focus heavily on magazine as well. Oct. 22-24, Las Vegas

The CPA Letter (ISSN 0094-792x) October 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] O c t o b e r 2000 • T he CPA L e t t e r 3

technology expertise. The CITP will help potential, the new credential can comple­ build that image. ment the CPA credential and improve SysTrust and WebTrust, two new both our marketing and our public ser­ assurance services, similarly build our vice. In the end, our contribution to the image as pacesetters in IT services. economy defines how we help society. And the work of the Assurance These activities and achievements and chair's Services Executive Committee, many more are reported in The CPA which produced these, Performance Letter and on our Web site. corner View, ElderCare, and other services, Some point to articles in the press continues. reciting the SEC’s criticisms of the pro­ The Internet portal, given the go- fession. The accusations should not be ahead at the Spring Council meeting, taken lightly. Anything that diminishes will bind us closer together as a profes­ our reputations is important. We must sion, enable us to provide better services always be certain our work meets the By Robert K. Elliott, CPA to our customers, and give us financial high standards we demand of ourselves. Chair, AICPA Board of Directors leverage. It will help us help small busi­ Recent SEC initiatives threaten the way We owe this profession to accountants a nesses, enhancing CPA-small-business auditing firms conduct their businesses. century ago who were far-seeing, realis­ relationships and contributing to the via­ However, research into the perceptions tic and unafraid of change. Go back to bility and growth of that segment of the of stakeholders commissioned by the the early days, and you will see how far economy. The portal’s networking fea­ Independence Standards Board found we have come. We should always mea­ tures will grow as an asset as we take that “the vast majority of respondents sure ourselves against that kind of increasing advantage of them. We are believe that auditors are currently per­ progress, not just for our own sake, but more and more a Web-based Institute, forming audits which meet a high stan­ because of what we owe to our forebears. and we will be becoming more and more dard of objectivity and independence.” Mindful of our obligation to keep faith a Web-based profession, with credentials We also have recent, positive findings with them, in this, my final Chair’s and expertise in electronic-information on audit quality. The Panel on Audit Comer, I ask, “How are we doing?” services. Effectiveness, created by the Public The Vision shows how forward-think­ The AICPA Core Competency Oversight Board, concluded that the audit ing we have become. The visioning Framework for Entry into the Accounting process and audit performance were solid. process involved so many members that Profession completed in the summer of After perhaps the most intensive study of we know its breadth and daring spoke for 1999 aligns our curricular goals with the audits ever performed, including so-called the profession itself. And we have been Vision. If put in practice on campuses “quasi peer reviews,” the panel’s chairman giving the Vision’s ideas structure and across the country, it would give new wrote, “[O]ur report demonstrates that everyday practicality. Its realization is direction to curriculum reform. Follow- both the profession and the quality of its growing. up steps already have been taken. audits are fundamentally sound.” The We took the lead in developing a lan­ Curriculum reform is vitally needed if panel found no connection between per­ guage for Internet business reporting. our profession is to continue to appeal to forming non-audit services and audit fail­ XBRL 1.0 was completed in July. Credit talented young people and prepare them ure or impairment of independence. for the achievement belongs to all mem­ for the real work-world they will be And finally, the steps taken in the past bers of the consortium, and there is joining. two years—from institutionalizing better plenty to go around. This new computer The AICPA’s Web-based Competency auditor-audit committee relationships to specification will make it easier to pre­ Assessment Tool launched in 1999 helps improving quality controls and issuing pare, publish, exchange, acquire and ana­ members plan their career paths and new accounting guidance—should pro­ lyze accounting and business-related CPE, with particular regard to the vide public assurance that auditors are information. It will make it easier to expanding role of CPAs in business and determined not to let down their stan­ transfer financial reporting information industry. dards of excellence. between computer applications, and this We are exploring a new global creden­ So the big picture is positive, even if will greatly multiply the types of reports tial that can expand our market permis­ much remains to be done and obstacles that can be generated. sions, particularly our claims in interna­ must be overcome. We are on the right We have added the Certified tional and advisory services, thereby path and full of momentum. We are keep­ Information Technology Professional enhancing the profession’s appeal to new ing faith with those who built the profes­ accreditation, furthering the Vision by recruits. It would facilitate the provision sion, and I believe we have the courage enabling CPAs to enhance their technol­ of high-value services to customers. and conviction to continue to do so. ogy advisory skills and practices. Our Council will vote on whether to submit the idea to a membership vote. If image in the marketplace depends heav­ [email protected] ily on being pacesetters in information approved and developed to its fullest 4 T he CPA L etter • O ctober 2000

• Debt and equity securities, as those terms are defined in FASB Not-for-Profit Organizations: Statement No. 115, Accounting for Certain Investments in Reporting on Prior-Year Debt and Equity Securities. The SAS indicates that an auditor may need special skill or Summarized Information knowledge to plan and perform auditing procedures for certain assertions about derivatives and securities, such as the ability to The AICPA Audit and Accounting Guide Not-for-Profit identify a derivative that is embedded in a contract or agreement. Organizations (paragraphs 3.20 to 3.21 and 14.03 to 14.05) pro­ The SAS presents examples of factors that affect inherent risk vides guidance for circumstances in which NPOs present prior- for assertions about derivatives or securities; for example, year(s) summarized information (for example, the statement of whether the transaction that gave rise to the derivative or secu­ activities includes amounts in total rather than by net asset rity involved the exchange of cash. Derivatives that do not class) for comparative purposes. The guide has been revised involve an initial exchange of cash are subject to an increased to clarify the auditor’s reporting requirements in those circum­ risk that they will not be identified for valuation and disclosure. stances. It also includes a section on control risk assessment. An The revised guide provides that, if prior year(s) financial example of a control over derivatives and securities is a require- statements are summarized and therefore do not ment that monitoring be performed by a control include the minimum information required by accountin g staff that is fully independent of derivative activities. FASB Statement No. 117 and the guide for a com­ The auditor assesses inherent and control risk for plete set of financial statements (statement of finan­ & auditing assertions about derivatives and securities to enable cial position, statement of activities, statement of news him or her to determine the nature, timing and cash flows, and accompanying notes), then a con­ extent of the substantive procedures to be per­ tinuing auditor should modify the introductory paragraph of his formed. Substantive procedures for derivatives and securities or her current year audit report to state that the summarized should address the five broad categories of assertions presented information has been derived from financial statements previ­ in SAS No. 31, Evidential Matter, which include existence and ously audited and the nature and date of his or her report on occurrence, completeness, rights and obligations, valuation, and those statements. In those circumstances, the auditor’s opinion presentation and disclosure. paragraph should not cover the prior-year(s) balance sheet, SAS No. 92 contains a section on auditing hedging activities. statement of activities, or statement of cash flows. An illustra­ Although GAAP does not provide a definition of a hedge, the fol­ tive introductory paragraph of the auditor’s report has been lowing definition may help readers better understand this concept. added to the guide. The revisions do not have a formal effective date. They are A hedge is a defensive strategy designed to protect an presumed to be effective upon publication of this notice in this entity against the risk of adverse price or interest-rate CPA Letter. A detailed explanation of the revisions is available on movements on certain of its assets, liabilities or antici­ the AICPA’s Web site at: pated transactions. A hedge is used to avoid or reduce www.aicpa.org/members/div/auditstd/compweb5.htm risks by creating a relationship by which losses on certain positions are expected to be counterbalanced in whole or in part by gains on separate positions in another market. SAS No. 92 on Auditing Derivatives The ASB is concurrently developing a companion audit guide and Securities Issued to help practitioners implement the new SAS. The guide will include an overview of derivatives and securities and the general Last month the Auditing Standards Board issued Statement on accounting considerations for them, as well as case studies that Auditing Standards No. 92, Auditing Derivative Instruments, address such topics as the use of interest rate futures contracts to Hedging Activities, and Investments in Securities (No. hedge the forecasted issuance of debt, the use of put options to 060694CPA10), to help auditors plan and perform auditing pro­ hedge available-for-sale securities, separately accounting for a cedures for financial statement assertions about derivative instru­ derivative embedded in a bond, the use of interest rate swaps to ments, hedging activities, and investments in securities. The new hedge existing debt, the use of foreign-currency put options to standard supersedes SAS No. 81, Auditing Investments, and is hedge a forecasted sale denominated in a foreign currency, chang­ applicable to: ing the classification of a security to held-to-maturity, and control • Derivative instruments, as that term is defined in FASB risk considerations when service organizations provide securities Statement No. 133, Accounting for Derivative Instruments services. The audit guide will be available this fall. and Hedging Activities. SAS No. 92 is effective for audits of financial statements for • Hedging activities in which the entity designates a derivative fiscal years ending on or after June 30, 2001. Early application of or a nonderivative financial instrument as a hedge of expo­ the SAS is permitted. Copies may be obtained by contacting the sure for which FASB Statement No. 133 permits hedge Member Satisfaction Team (see page 6; price: $11.50 member, accounting. $14.50 non-member). O c t o b e r 2000 • T he CPA L e t t e r 5

Tax Executive Committee Adopts Enforceable Statements on Standards for Tax Services On July 31, the Tax Executive Committee 202, Compliance With Standards. The the Journal of Accountancy and is available voted to adopt the Statements on SSTSs supersede and replace the on our Web site at www.aicpa.org/mem- Standards for Tax Services and Statements on Responsibilities in bers/div/tax/index.htm. Interpretation 1-1 as enforceable Tax Practice and their Interpretation An article explaining the SSTSs and the standards as part of the AICPA’s 1-1 effective Oct. 31, 2000. The full process of converting the SRTPs into t a x i n f o Code of Professional Conduct Rule text of the new standards has been enforceable standards will appear in the 201, General Standards, and Rule published in this month’s issue of Nov. issue of the Journal.

WebTrustSM/™ Program for Certification Authorities Version Exposure Draft for WebTrust Program for Online Privacy 1.0 Finalized Allows Early Adoption A recently finalized WebTrust Program for Certification An exposure draft of the new WebTrust Program for Online Authorities with a corresponding set of WebTrust Privacy that was released recently (comments were Principles and Criteria provides standards for per­ due Sept. 30) provides for early adoption (see guid­ forming and reporting on the results of an audit of a assurance ance on early adoption in appendix E of the docu­ certification authority. Certification authorities are services ment). The accounting profession has developed and trusted third parties that provide a level of assurance is now promoting a program with corresponding cri­ that a public key contained in a public key certificate teria for e-commerce for the protection of personally actually belongs to the entity named in that certificate. identifiable information, referred to as the WebTrust Program for Public key certificates are used to validate the identity of the Online Privacy. signer of a digital signature. The model’s principles and criteria The new WebTrust Program for Online Privacy, which is the are substantially based on the control objectives and procedures first model to be released under Version 3.0 of WebTrust, allows included in the American National Standards Institute’s (ANSI) WebTrust practitioners to independently verify that the entity’s X9.79 PKI Practices and Policy Framework standard. Web site informs customers as to an entity’s privacy policies and The result of groundbreaking coordination among these groups that the site actually follows these policies. It also allows is promulgation of a series of standards that when applied will WebTrust practitioners to provide stand-alone assurance for online create a “community of trust” to facilitate secure electronic com­ privacy, which is a very hot issue in the U.S. and other countries. merce by providing for confidentiality, (strong) authentication, Public accounting firms and practitioners who have a WebTrust integrity and non-repudiation. business license from the AICPA, Canadian Institute of Chartered You can download the model from the AICPA Web site: Accountants, or other authorized national institutes (practitioners), can provide assurance services to evaluate and test whether a par­ www.aicpa.org/webtrust/index.htm ticular Web site meets the WebTrust Privacy Principles and If you have any questions on this model, contact Sheryl Criteria as set forth in this document, and following the engage­ Martin: ment, award the site with a WebTrust Seal. Download the exposure draft of the WebTrust Program for [email protected] Online Privacy at www.aicpa.org/webtrust/index.htm. Questions regarding this new WebTrust Program should be sent to Sheryl 201/938-3751 Martin at [email protected].

The Business of eBusiness: Audit, partner identification, reviewing application services. Discover how you can take advan­ Control and Accounting in a Dot.Com ROI, auditing e-fraud, and more. tage of the challenges and demands of the World. The AICPA, the Information Registration fee: $995 AICPA dynamic business environment from Systems Audit and Control Association and member. Recommended CPE credit: sessions that address multidiscipli­ the MIS Training Institute have joined 18 hours. CPE nary practices, marketing and selling forces to present The Business of eBusiness, emerging services, asset manage­ Dec. 4-6, at Caesar’s Palace in Las Vegas, MAP 2000 Focus on New Services. new s ment, outsourcing, differentiating with optional workshops on Dec. 3 and 6-7. Come to the MAP 2000 Focus on your firm with new services, e-busi­ This conference will provide up-to-the- New Services conference, Nov. 2-3, in ness, and strategic planning services, among minute strategies for addressing the finan­ Litchfield Park, Ariz. (close to Phoenix). other topics. Registration fee: $745 PCPS cial, operational, auditing and security chal­ This conference is packed with hands-on member, $945 AICPA member. lenges associated with electronic com­ information on how to strategically expand Recommended CPE credit: 16 hours. merce. Session topics include regulatory your practice. Identify and leverage unlim­ For more information, or to register, con­ requirements for e-business, wireless secu­ ited opportunities for billable work from tact the Member Satisfaction Center (see rity, auditing the certificate process, trading your existing clients through nontraditional page 6) or visit www.aicpa.org/conferences. 6 The CPA L etter • O ctober 2000

ATB for Windows™ — New Version 3.0 from Creative Solutions nel, and top services and procedures. (No. 990900hsCPA10) is the recognized market leader in trial bal­ • Accounts receivable analysis and fair market value calculations. ance software. ATB for Windows™ has been updated to take full • Inventory analysis and fair market value calculations. advantage of the advanced power and processing speed of 32-bit Price: $495 member; $795 non-member. Windows technology. With its incredible speed, ease of use, and performance capabilities, ATB fo r BIZCOMPS® 2000 from Wiley-ValuSource (No. Windows™ automates the engagement process and now 016160hsCPA10) examines more than 4,110 actual eliminates inaccuracies caused by repetitive data entry. U.S. businesses totaling in excess of $820 million in Quick, easy client setup lets you get moving available sales and presents all of this information on one sepa­ fast. Simply open the Create Company Wizard and rate Window’s disk — complete with enhanced mar­ follow the step-by-step guide through a series of screens in which ket data appraisal report module. This stand-alone program allows you enter company information. ATB for Windows™ lets you you to access the data by SIC code, NAICS code, word search, enter up to a 20-position alphanumeric account number, a 10-posi­ sale size and geographical area. It also gives you the ability to pre­ tion department number and company name. You can also set up pare statistical analyses and graphs. customized company templates of your own for use with engage­ All sold businesses are compared by: ments of a similar type or in the same industry. • Sales price to gross sales — also graphed and with medians. Seamless importing saves time at every turn. ATB fo r • Sales price to seller’s cash flow — also graphed and with Windows™ allows you to quickly import ASCII, comma-separated medians. and dBase formats with ease. It includes a direct import link from • Gross sales by seller’s cash flow to determine profitability. QuickBooks so you can bring up a client’s records and swiftly pre­ • Actual down payment versus all cash. pare any financial statement you need without ever re-keying data. • Rent as a percent of gross sales. Generate professional looking financial statements with • Value of furniture, fixtures and equipment. ease. Using ATB for Windows™ to format and print presentation- • Value of inventory at time of sale. quality financial statements is simple. Fonts, colors, bolding, auto­ Price: $245 member; $295 non-member. matic adjustment of line height, and single and double underlining are all available at your command. Its print preview feature dis­ A CPA’s Guide to Restaurant Management Strategies: plays everything you need to see — immediately before you print Accounting, Cost Controls, and Analysis (No. 091005CPA10). out the financial statement you are going to show a client or dis­ This new publication, based on a best-selling CPE self-study tribute at a meeting. course, gives the CPA an introduction and overview of the $336 Enhanced exporting features give you more flexibility. With billion dollar restaurant business. Gain an understanding of food, ATB for Windows™, you can export data to your favorite word bar and energy cost controls, management of labor, and overall processing or spreadsheet program or any ASCII, comma-sepa­ accounting for restaurants. Learn how to help your restaurant rated or dBase format program. You can save countless hours of clients succeed in this dynamic business. Price: $36 member; $45 tax preparation time by exporting data directly to your tax pack­ non-member. age. ATB for Windows™ supports Creative Solutions Ultra Tax, CCH ProSystem fx, GoSystem Tax, CPA Software, Intuity/Lacerte, Financial Statement Reporting and Disclosure Practices for Tax Relief Tax Wise and generic text files. Employee Benefit Plans—Second Edition (No. 006608CPA10). For additional product/technical information, call the software Offering the same kind of powerful help as the AICPA’s Accounting support team at 800/226-5800. Order ATB for Windows™ from Trends & Techniques, this publication carefully illustrates a wide Member Satisfaction. Price: $695 member; $770 non-member variety of employee benefit plan financial disclosures and auditors’ (includes maintenance and free support for one year). reports for both full- and limited-scope audits. These include 401(k) features; plan mergers, amendments, and terminations; investments; Appraisal MD Pro from Wiley-ValuSource (No. interest in master trusts; contracts with insurance companies; pro­ 016161hsCPA10) — Designed by a Medical Valuation Expert for hibited transactions; information certified by trustees; and illustra­ Medical Valuation Experts. If medical valuations are an important tive new Form 5500 schedules. Updated to include Statements of part of your valuation practice, then you and your clients will ben­ Position 99-2 and 99-3, and the supplemental schedules of the efit from Appraisal MD Pro. Everything needed to standardize revised Form 5500, our comprehensive employee benefit plans and automate medical valuation practices is now at your finger­ practice aid gives you immediate access to all the answers you tips. When this program is interfaced with Wiley-ValuSource’s need. Price: $52 member; $65 non-member. numerous databases, you will have all the power you need to make sophisticated valuations. Appraisal MD Pro includes a vari­ To order, write: AICPA Member Satisfaction Team, CPA 10, ety of helpful features, including: P.O. Box 2209, Jersey City, NJ 07303-2209; fax, • Ease to edit medical chart of accounts. 800/362-5066; call 888/777-7077 (8:30 a.m. to 7:00 p.m., • Input to both own and non-owner physicians. ET); or e-mail [email protected]. Prices do not include ship­ • Historic FTE schedule. ping and handling. Have membership number ready. • Easy-to-use input tables for payer mix, office support person­ O ctober 2000 • T he CPA L etter7

Qs&As Released on SOP on Accounting by Practice Alert 00-04 Issued on Quarterly Review Producers/Distributors of Films Procedures for Public Companies The AICPA staff, helped by industry experts, released technical Practice Alert 2000-04, Quarterly Review Procedures for Public questions and answers on financial accounting and reporting Companies, has been issued this month. It is intended to provide issues related to Statement of Position 00-2, Accounting by auditors with information that may help them improve the effi­ Producers or Distributors of Films. The staff may continue to ciency and effectiveness of their quarterly reviews. release Qs&As on SOP 00-2 as issues arise. Qs&As will be The alert is included in copies of this newsletter being mailed to housed in the AICPA publication titled Technical Practice Aids, members in public accounting. Members in other segments wishing copies of which are available through the Member Satisfaction to obtain a copy should visit www.aicpa.org/pubs/cpaltr/index.htm Team (see page 6). In addition, the Qs&As will be placed in the (Oct. 2000 issue) or dial 201/938-3787 from a fax machine and key accounting standards part of the AICPA Web site in document no. 1566. (www.aicpa.org/members/div/acctstd/general/othitem.htm). All previously issued Practice Alerts can be found on Questions on these Qs&As may be sent to Dan Noll via e-mail the SEC Practice Section’s Web page at www.aicpa.org/mem- ([email protected]). bers/div/secps/lit/practice.htm.

As a result of investigations of alleged Richard D. Kieffer of Olney, Ill., suspended from member­ violations of the Code of Professional ship in the AICPA for six months, effective May 9, 2000. Conduct of the AICPA and/or state Roy Lee Karr Jr. of Alpine, Texas, expelled from membership in CPA societies, the following ethics disciplinary the AICPA and the Texas Society of CPAs, effective July 29, 2000. cases have been resolved by settlement actions Details on these disciplinary actions can be accessed through: agreement under the Joint Ethics www.aicpa.org/pubs/cpaltr/index.htm Enforcement Program: Survey Measures AICPA Members' Perceptions of Various Retirement Products

A recent AICPA survey found that many Member Retirement Committee. help you save for retirement, call Institute members believed they needed to “Financial experts generally recognize 800/355-1608 to order a free information do more to prepare for retirement and were variable annuities as a good way to sup­ package. unaware of the value of certain retirement plement retirement income. Contributions products. For example, while 80% of to the annuities grow tax deferred and, Group deferred variable annuity contracts, respondents rely on 401(k) or employee- unlike other retirement plans, there is no form J438, are issued by Great-West Life & sponsored plans, and 75% use traditional limit to how much can be contributed.” Annuity Insurance Company. Securities are IRAs for retirement savings, just 19% use The AICPA Variable Annuity currently offered through BenefitsCorp Equities, Inc., variable annuities. offers no loads, commissions a wholly owned subsidiary of Great-West. Overall, the survey found or surrender charges, several May not be available in all states. Account that attitudes toward variable member high-quality investment annuities were mixed, due in new s options and low fees. Also, the value will vary depending on the investment part to a lack of familiarity AICPA Member Retirement options you choose and is not guaranteed as with the product. Sixty-five Committee monitors the prod­ to principal. percent of those surveyed were either some­ uct to help ensure its continued competi­ what or not at all familiar with variable tiveness. Member Satisfaction Center annuities. Moreover, of those who disliked “We designed the AICPA Variable • Address/membership information variable annuities, 19% said high fees and Annuity not only to counter some of the • Orders and inquiries 12% said the inaccessibility of funds before negative perceptions, but also to provide • Subscriptions some unique benefits that others do not age 59-1/2 were reasons for not favoring the • Conference registrations product. However, most respondents said have,” said Jay Rothberg, vice president, • Network licenses they did not know why or had no specific AICPA Office of the CEO. reason for disliking variable annuities. For more information about variable 888/777-7077 “Based on the survey results, we found annuities, visit the National Association for that there is a strong need for us to edu­ Variable Annuities’ consumer education site [email protected] cate members on the retirement savings at www.retireonyourterms.com. Or, if you Voice Mail Box comments, benefits that variable annuities offer,” said are specifically interested in finding out 888/999-9252 Lisa Germano, chair of the AICPA how the AICPA Variable Annuity might 8 The CPA L etter • O ctober 2000

continued from page 1 — AICPA Challenges SEC are privately held. Shamis, whose firm does not audit any SEC the AICPA supports the work of the Independence Standards registrants, said he could not sleep at night worrying about his Board, created three years ago as a promising partnership practice, his career and his profession. Expecting that his state between the SEC and the profession, and believes the ISB accountancy board would adopt the SEC’s rule if put in place, he should be the body setting auditor independence rules. His writ­ said that if that happens, he would have to dismantle his firm, ten testimony also pointed to the law of unintended reducing the workforce by approximately 50% by consequences, saying “It is likely, if not inevitable, selling off business lines and terminating employees. that complex and highly interventionist regulation regulatory Shamis and Viere also pointed out that the proposed will have unintended consequences when drafted “affiliate” rule would severely limit the ability of and considered in a compressed crisis mode.” m atters firms to form alliances with other entities—a busi­ Others to speak on the profession’s behalf were ness arrangement that is very popular and necessary AICPA Chair Robert K. Elliott, Management of an Accounting among medium and smaller firms. Practice Committee Chair Gary Shamis, and Practice Group B Further supporting the profession’s arguments were findings Advisory Committee Chair Gordon A. Viere. PCPS Executive from a national poll of 600 individual investors aged 25 and older. Committee Chair Harold I. Monk Jr. provided written testimony. Results show that American investors overwhelmingly believe the In his testimony, Elliott encouraged the SEC to essentially selection of auditors and other consultants is the responsibility of scrap its proposed rule in favor of developing a concept release corporate leadership, not government regulators, and a substantial based on the ISB’s work on auditor independence and crafting majority of respondents said a new proposal to restrict services by another on accounting for the New Economy. “We are committed accounting firms could hurt audit quality. Fully 91% said they to auditor independence,” Elliott said, “but there’s no evidence of have confidence in the annual audits of financial statements of any problem, let alone a crisis.” He added that the SEC’s companies they invest in. Moreover, by a margin of 4 to 1 (79% to “...hastily and poorly drafted rule proposal” would wreak havoc 19%), investors believe that the more auditors know about a com­ on accounting firms of all sizes. pany, the better the audit. The poll was commissioned by the Shamis and Viere spoke of the ripple effect of other regulatory AICPA but conducted by Penn, Schoen & Berland Associates, an bodies (e.g., state accountancy boards) passing rules to be in sync independent Washington, D.C., company. with the SEC and the devastating impact that would have on firms Watch The CPA Letter for more on the SEC’s proposed rule as

of all sizes and potentially on all their clients, including those that the process unfolds.

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Periodicals November 2000 Vol. 80 No. 9 TheA News Report to Members CPA Letter SEC Chairman Levitt Addresses Fall Council — Focuses on Proposed Rule on Auditor Independence A

merican In a speech to the AICPA governing Council Regarding the scope of services, the AICPA Highlights at its Oct. meeting, SEC Chairman Arthur remains troubled by any broad restrictions, Levitt delivered a passionate message about especially given the lack of evidence of a

I 2 the need for a meaningful partnership with decline in audit quality when non-audit ser­ Kathy G. Eddy Elected the profession to find a solution to the com­ vices are provided to audit clients. nstitute New AICPA Chair mission’s proposed rule on auditor indepen­ “The auditing profession is, in my mind, dence that would satisfy public interest con­ one of the most noble in our marketplace,” 3 cerns while maintaining the profession’s said Levitt. “At the very core of the auditor’s

O Auditing Standards ability to perform services that address the mandate is preserving the sanctity and purity Board Issues Exposure public’s needs. of the numbers.... But [the audit] franchise C f Draft of Amendment “One of the key issues for the profession demands you defend and protect, above all

ertified to SAS No. 55 has been the proposed rule’s potential impact else, the public trust.... Today, the mission on small firms, were the SEC’s rule to be and purpose of the CPA has never been more 3 adopted by state boards of accountancy or important.”

P Committee and Task Force other regulatory agencies,” said AICPA The commission and the profession’s Members Wanted President & CEO Barry C. Melancon. leadership have been working closely ublic “Prevention of such a ripple effect is a high together to reach an agreement that will both

A 4 priority for the AICPA, and Levitt has indi­ uphold the public interest and enable the “Chair’s Comer” cated that he shares this concern.” profession to serve the public in the long c ants n ta n u cco Other issues still to be resolved include term. At press time, a final rule appears 4 self-regulation and the role of self-regulation imminent. See future issues of The CPA Highlights of Board of in the future, and the definition of indepen­ Letter for more information as developments Directors’ September dence and how appearance plays a part in it. unfold. Meeting 6 Highlights of Council’s Fall Meeting National Advertising Among other actions at its meeting on Oct. plan that includes market research results Schedule Announced; 23-24, the AICPA governing Council: and an analysis of the implications for stu­ Most States Join AICPA in • Elected Kathy G. Eddy of West Virginia dent enrollments; and establishment of a this Year’s Image as chair of the AICPA Board of Directors separate organization (instead of a wholly Enhancement Campaign for 2000-2001, and James G. Castellano owned subsidiary) or affiliate to be the 6 of Missouri as vice chair. member organization for the new creden­ • Overwhelmingly passed a resolution that tial. Council voted in favor of the resolution AICPA Annual Report supports the AICPA’s continued involve­ after several past chairs and a number of Posted to Web Site ment in the proposed new global credential state society presidents discussed the pro­ being developed by an international con­ fession’s responsibility to offer future CPAs sortium of accountancy institutes and indi­ a relevant, viable, rewarding career. cates its intent to authorize a membership Heard a report on a recent research effort ballot at its May 2001 meeting (The CPA focusing on causes for a downturn in the Letter, Oct.). The resolution voted on was number of students majoring in account­ not the one crafted by the Board of ing and becoming CPAs and identifying Directors, but one offered by the Ohio dele­ the means to reverse this trend. Also gation. Among other differences, it calls for heard about a study that identifies the continued support, promotion and changes in business that affect accounting enhancement of the CPA credential and the education and emphasizes the need for CPA profession; preparation of a business continued on page 3 2 The CPA Letter • November 2000

Kathy G. Eddy Elected New son is a headhunter attempting to obtain Dial 201/938-3787 from a fax AICPA Chair firm names, titles and phone numbers for machine and key in document nos.: use in recruitment efforts. Members are large firms, 1550; medium firms, 1551; Kathy G. Eddy of West Virginia reminded the AICPA does not solicit small firms, 1552; business & industry, was elected chair of the AICPA this type of information from 1553; internal audit, 1554; and govern­ Board of Directors at the governing n e w s accounting firms. Be assured any ment, 1555. The education supplement Council/Annual Members’ Meeting such caller has no affiliation with the was not published this month. last month in Las Vegas. The term briefs AICPA. If you receive such a call, advise Jay Rothberg, vice-presi­ of the appointment is from Oct. www.aicpa.org/pubs/cpaltr/index.htm dent—office of the CEO, at 2000 until Oct. 2001. 212/596-6005, or call our Member Eddy, a shareholder in a smaller Satisfaction Voice Mail Box at accounting corporation, has long been 888/999-9252. New Publication Schedule for active in serving the profession. She co­ Education Supplement chaired the AICPA/NASBA National Steering Committee for the Regulation of Send Us Your E-Mail Address To better conform to the academic year of the Profession, was a member-at-large of If you have not submitted your e-mail members in academe, the AICPA has Council, and continues to serve on the address to us or have changed it recently, changed the months of publication of the Political Leadership Cabinet. Eddy also send your e-mail address to CPA Letter supplement for members in had been a member of the Special [email protected]. Indicate “e-mail education. Going forward, the supplement Committee on Regulation and Structure of address update” in the subject header field will be published in Sept., Nov., Feb./Mar., Apr. and May. This schedule enables news the Profession and completed a three-year to help us process the submissions more to be delivered more evenly during the appointment as a member of the Board of efficiently. Be sure to include your full academic year and takes into account the Directors. In addition, she has served the name, and, if known, your membership number on the e-mail message. Be assured absence of many educators during the tra­ West Virginia Society of CPAs and the ditional winter (Jan.) recess. West Virginia Board of Accountancy by the AICPA will not sell your e-mail address to outside third parties. Readers are encouraged to visit holding all offices, including president, of www.aicpa.org for updates and develop­ both organizations. ments between issues of the supplement. As chair of the board of directors, Eddy Guide for Claiming Inventory plans to continue pursuing the profession’s Deductions Offered by NAEIR high-priority initiatives: the Internet portal, By donating unproductive inventory to the proposed new global business creden­ charity, a business can earn a federal tial and issues being addressed by the Group of 100 task forces. “We need to be income tax deduction under Section 170 PUBLIC MEETING NOTICES (e)(3) of the Internal Revenue Code. certain these initiatives come to fruition,” For detailed agendas, dial 201/938-3787 Examples of unproductive inventory Eddy said. “They all are projects that will from a fax machine and key in document include nonmoving stock, discontinued help members achieve the Vision.” no. 1206 two weeks prior to these meetings. SKUs or slow sellers. CPAs may receive a Besides service to the profession, Eddy Accounting & Review Services is a volunteer on several community free guide that includes step-by-step Committee: Nov. 30-D ec. 1, New boards and has been the recipient of a instructions on the donation process as Orleans number of awards for public service. well as a formula for calculating a com­ pany’s potential tax savings. To obtain a Accounting Standards Executive Committee: Dec. 11-12, Orlando, Fla. copy, call the nonprofit National Members Warned About Calls Auditing Standards Board: D ec. Association for the Exchange of Industrial from “AICPA” Soliciting 13-14, Tempe, Ariz. Resources at 800/289-4 551. Information Professional Ethics Executive Committee: Nov. 3 0 -D ec. 1, The AICPA has learned that during the CPA Letter Supplements Washington, D.C. past several months, someone posing as a Available representative of the AICPA has been con­ tacting accounting firms claiming to be To obtain any of the member-segment sup­ Other Meetings updating a mailing list of the firm’s plements produced this month with The Peer Review Board: Jan. 8-9, 2001, San employees. The Institute suspects this per­ CPA Letter. Antonio, Tex.

The CPA Letter (ISSN 0094-792x) November 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster: Send address changes to The CPA Letter, Circ. D ept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L. Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] N ovember 2000 • T he CPA L etter3

continued from page 1 — Fall Council Meeting • Presented AICPA Gold Medals for treasurer of the AICPA Board of accounting curriculum reform. Distinguished Service to Richard E. Directors and as a long-time member of • Watched a video presentation on finan­ Piluso of New York and to Dominic A. the governing Council. Tarantino’s many cial markets in the 21st century, given the Tarantino of Connecticut. Piluso’s dedi­ contributions to the profession include ever-growing importance of the Internet cated leadership to the profession chairing the Tax Division Administrative and its affect on the economy. throughout his career involves a broad Committee, the Accounting Research • Was updated on the Internet portal pro­ array of activities in the AICPA and in Association, the AICPA Foundation and ject in detail and on the XBRL initiative. other accounting organizations, as well the National Accreditation Commission. • Held educational sessions on self-regu­ as in his state CPA society. Among He also served on the AICPA Board of lation in the New Economy. them, he served as vice president and Directors.

Auditing Standards Board Issues Exposure Draft of Amendment to SAS No. 55 The Auditing Standards Board has issued an exposure draft of a auditor’s understanding of internal control and assessment of con­ proposed statement on auditing standards titled trol risk. The ASB believes the guidance is needed Amendment to Statement on Auditing Standards No. because entities of all sizes increasingly are using IT 55, Consideration of Internal Control in a Financial accounting in ways that affect their internal control and the audi­ Statement Audit, as Amended by Statement on & auditing tor’s consideration of internal control in a financial Auditing Standards No. 78. Comments are due news statement audit. Consequently, in some circumstances, Jan. 1, 2001. auditors may need to perform tests of controls to per­ The proposed SAS provides guidance to auditors about the form an effective audit. effect of information technology on internal control, and on the To obtain a copy of the proposal, visit www.aicpa.org.

Federation of Schools of Accountancy Announces Annual Meeting The 2000 annual meeting of the XBRL, the AICPA’s proposed new global tion topics. Other concurrent sessions Federation of Schools of Accountancy will business credential project, implementing focus on addressing the interests of gradu­ take place at the Marriott Riverwalk Hotel the findings of the Albrecht/Sack report, ate program directors and advisors, and on in San Antonio, Texas, on Dec. 3-5. This and the impact of international accounting program and curriculum changes being meeting’s program focuses on current standards. made at leading accounting programs. issues impacting accounting educators. There are concurrent sessions jointly Visit the FSA Web site at www.fsa.org Plenary sessions include presentations on sponsored with the AACSB on accredita­ to complete your registration form.

Committee and Task Force Members Wanted Why should a member volunteer? Members benefit by staying at on the use of the Internet. Therefore, access to the Internet and an the forefront of their profession and often participate directly in e-mail account are requirements for committee participation. shaping the policies and procedures that affect the profession To apply for volunteer service: and/or particular practice or industry area. Also, valuable con­ 1. Logon to www.skillscape.com/aicpaonline. tacts are made with peers who can help or advise on daily job 2. Click on the “Skills” button at the top of the screen to activities. select skills. This is a simple point-and-click During the 1999-2000 committee year, the appli­ approach allowing you to create a skills profile that cation process for volunteer service was expanded to member uniquely characterizes your business experience. If encompass task forces, expert panels, and resource ___ news you have previously submitted a skills profile, it is panels as well as traditional standing committees. not necessary to submit one again unless you have Concurrent with the creation of new volunteer additional skills you would like to select. groups, the previous paper-based application process was 3. Click on the “Apply” button at the top of the screen to replaced by a Web-based process. To apply for volunteer service, select the committee, task force, etc. that you are interested in members now are asked to submit demographic data, committee applying for. preferences, and skill profile information selected from a list of Additional instructions for completing the process can be found skills. Knowledge of members’ basic skills has supported the on the Web site. Applications must be completed by Feb. 23, 2001. appointment process and allowed for members to be proactively Questions, comments or suggestions regarding the application contacted when a newly created task force has been formed with process should be directed to the Committee Appointments Team: which their unique skills are a good match. Going forward, the committee appointment process as well as [email protected] other committee support activities will be increasingly dependent 4 The CPA Letter • November 2000

Vision is our blueprint for survival. dential would enable us to stake out terri­ We cannot stray from it. tory in a lucrative and currently unclaimed (3) Consideration of fiscal responsibil­ marketplace. The value of the CPA creden­ ity. Only a financially sound tial would remain as strong as ever; this Institute can continue to protect the proposed credential would add assurance of profession and the public. a broader set of competencies. Pairing the Here is a quick synopsis of a few of CPA credential with the global credential chair's the initiatives stemming from the would offer CPAs worldwide opportunities Vision that I believe will enable mem­ for growth and expansion. corner bers to increase their value to their var­ One other visionary innovation on the ious publics, while adhering to my horizon is the Internet portal. The portal three guidelines. Task forces of the Group will be of enormous value to smaller firms of 100 are focusing on defining and devel­ and smaller organizations — segments oping an ethical framework for the reposi­ often shortchanged in the multinational, By Kathy G. Eddy, CPA tioned profession; crafting an AICPA-spon­ high-tech global economy. Being from a Chair, AICPA Board of Directors sored student internship program that will small firm myself, there are 14 of us, I am As the new Chair of the AICPA Board of reach out to college/university students to particularly excited by the portal project. Directors, I am looking forward to writing entice them to become CPAs; assessing With cpa2biz, CPAs will be able to level these columns to discuss issues and initia­ ways to improve products and services for the playing field for small business clients tives affecting our profession. It is an excit­ members in business and industry; explor­ and employers, while strengthening busi­ ing time for us, a time of challenges from ing how to maximize technology for the ness relationships and generating income. which wonderful opportunities emerge. profession; and examining the politics and Most importantly, the AICPA should be Our efforts have put a lot on our plate. policies needed to achieve agreement on a considered the national home for CPAs. I To help prioritize all the goings-on, I came new financial accounting model (that is, will take an active role in making sure you up with three guidelines for deciding which how to move a new financial model for­ are a part of the change process, that your projects will receive my aggressive support. ward). views are heard, that we are responsive to (1) Projects and initiatives that enhance I also am an ardent supporter of another you, and that we are a resource for you. our hallmark and advance our abil­ Vision-aligned initiative: the proposed Together we can make this profession all it ity to build on the profession’s repu­ global professional credential. I am pleased can be, for us and for CPAs in the future. tation as protector of the public. to announce that Council voted in favor of a (2) Projects and initiatives that are resolution supporting our continued [email protected] aligned with the CPA Vision. The involvement in this initiative. The new cre-

Two AICPA Videos Win Awards Two videos produced by the AICPA’s in-house Multimedia Millennium,” the program promotes the new image of CPAs Group have been recognized for Aurora Awards, an independent through an evolution of perspectives and perceptions. In addition, film and video competition for commercials, cable programming, a Gold medal award was given to the “AICPA Top Ten documentaries, instructional and corporate videos. “Platinum Technologies 2000 Highlights” video, a program that reviews the Award” and “Best in Show” honors went to the opening video for latest trends in technologies affecting CPAs and the business the 1999 Fall Council meeting. Titled “Welcome to the New environment. Highlights of Board of Directors’ September Meeting Among other actions at its meeting on Sept. 14-15, the AICPA Heard a presentation by the National Association of Black Board of Directors: Accountants. • Heard an update on the proposed new global professional credential and approved language for a Council resolution Member Satisfaction Center for presentation to Council (The CPA Letter, Oct.). • Address/membership Conference registrations • Received a report on the AICPA’s testimony before the SEC on its information independence rulemaking proposal and reviewed elements of the • Orders and inquiries Network licenses Institute’s draft comment letter to the SEC (The CPA Letter, Oct.). • Subscriptions • Was provided progress reports on the XBRL initiative, plans 888/777-7077 [email protected] for SysTrust Services, selection of a vendor for test delivery Voice Mail Box comments, of the computerized Uniform CPA Examination, and efforts 888/999-9252 on behalf of the Internet portal. N ovember 2000 • T he CPA L etter5

As a result of investigations of alleged violations of • Kenneth A. Mack of West Orange, N.J., two- the Code of Professional Conduct of the AICPA year suspension effective Sept. 25, 2000. and/or state CPA societies, the following ethics cases • Timothy J. Skodon of Oak Lawn, Ill., expelled have been resolved by settlement agreement under the d i sciplinary effective Sept. 11, 2000. Joint Ethics Enforcement Program: Details on these disciplinary actions can be accessed • Harold J. Goldman of Summit, N.J., six-month actions through: suspension effective May 24, 2000. • Alan Jewell of Lee’s Summit, Mo., two-year suspension effec­ www.aicpa.org/pubs/cpaltr/index.htm tive Sept. 5, 2000.

2000/2001 AICPA Audit Risk Alerts Investment Companies (No. Price: $314 member; $349 non-member. ($14.95 member, $20.95 non-member) 022263CPA11) Real Estate (No. 022264CPA11) NEW Selection—Pension & Roth IRA NEW Alerts Retail (No. 022265CPA11) Analyzer (No. 016260hsCPA11) from The ABCs of Independence (No. Securities (No. 022266CPA11) Brentmark Software handles virtually all 022271CPA11). A must-read basic primer aspects of pension distribution planning: on the fundamentals of independence. NEW —Up Your Cash Flow minimum distributions, pre- Whether you are unfamiliar with the stan­ Platinum (No. 59½ distributions, Roth IRA dards or need a user-friendly refresher, this 016164hsCPA11) from now conversions, spousal rollovers, alert is for you. Granville Publications income taxes, estate taxes, SEC A lert (No. 022272CPA 11). Software has 21 great new available IRD calculations, life insur­ Developed in conjunction with SEC staff, features and reports. With just ance, donee exclusion gifting this alert provides valuable insights into a few keystrokes, you can prepare financial and more. staff perspectives on numerous accounting plans, cash flow and profitability projec­ It includes full-color 3D stacked bar and auditing issues. The alert also includes tions, annual budgets and a variety of charts and allows you to create your own updates on recent SEC activities. financial analysis reports using this power­ reports in the Report Designer. Price: $404 E-Business (No. 022273CPA11). Find ful software program. member; $449 non-member. out what is happening in the realm of e- Up Your Cash Flow Platinum gives For a free CD-ROM demo of business and how it will affect audits. you a new level of planning power with Brentmark software products, call Celeste Implementing SSARS No. 8 (No. automated roll-forward, automap for Booth at 212/596-6194 or e-mail 022274CPA11). The new amendments to import, easy access tool bars, “what-if’ [email protected]. SSARS No. 1 contain significant revisions. analysis and global updates, enhanced job This new alert is filled with practical guid­ cost allocations, and new reports. The new NEW Selection—Money Tree Suite - ance on how to apply those amendments. automapping feature fully automates the Easy Money, Golden Years and planning process by allowing you to Retirement Solutions (No. NEW Editions— General Alerts ($16 import your trial balance from an account­ 016169hsCPA11). A unique trio of financial member, $23 non-member) ing package and by creating combinations planning programs from Money Tree Compilation and Review Alert (No. and relationships. Price: $795 member; Software, Money Tree Suite offers an end 022270CPA11) $895 non-member. to your ongoing search for easy-to-learn General Audit Risk Alert (No. and easy-to-understand software tools. 022260CPA11) NEW Selection—Estate Planning Tools Individually, and in tandem, they provide (No. 016163hsCPA11) from Brentmark outstanding solutions to your financial plan­ NEW Editions — Industry Alerts Software presents cutting-edge estate and ning calculation needs. Price: $1,395 mem­ ($14.95 member, $20.95 non-member) financial planning techniques. This com­ ber; $1,550 non-member. Auto Dealership (No. 022254CPA11) prehensive software program presents a Common Interest Realty Associations host of advanced financial and estate plan­ (No. 022255CPA11) ning techniques, including the most elabo­ To order, write: AICPA Member Construction Contractors (No. rate GRAT model available, QPRTs, pri­ Satisfaction Team, CPA11, P.O. Box 022256CPA11) vate annuities, charitable trusts, and IDIT 2209, Jersey City, NJ 07303-2209; fax, Depository Institutions and Lending installment sales. 800/362-5066; call 888/777-7077 (8:30 (No. 022257CPA11) There are 99 planning models, many a.m. to 7:00 p.m., ET); or e-mail mem- Health Care (No. 022258CPA11) including reports, graphs and detailed [email protected]. Prices do not include High Technology (No. 022259CPA11) explanations that you can present to your shipping and handling. Have mem­ Insurance Industry (No. clients. You also can save results to spread­ bership number ready. 022262CPA11) sheets for more customized analyses. 6 The CPA L etter • N ovember 2000

National Advertising Schedule Announced; Most States Join AICPA in this Year’s Image Enhancement Campaign

The AICPA kicked-off its fall schedule for this year’s national existing television spots. As part of a pilot cooperative advertising advertising campaign with radio spots on Oct. 21 during major program with the Institute (The CPA Letter, Oct.), 35 states are league baseball’s World Series. As mentioned in last month’s CPA receiving a total of $733,694 in matching funds, boosting their Letter, the Institute is placing heavy emphasis on national radio planned advertising expenditures to an unprecedented level of network advertising to broaden the reach and increase the fre­ nearly $3 million. What’s more, an astounding 26 of those 35 quency of the CPA brand message among key audiences. states increased their advertising budgets over last year. Four new radio spots were developed and will run through Nov. The combined effort of the AICPA’s and state societies’ adver­ 19. More than 175 placements will be heard on ABC Radio tising campaigns certainly will result in broader reach and more Networks (Prime Radio Network’s affiliates, MoneyTalk with Bob frequent messages among those who use or buy CPAs’ services. Brinker, the ESPN Radio Morning Show, NBA on ESPN Radio, BusinessWeek Business Report, and Major League Baseball and [email protected] World Series); and Westwood One (the CBS Network, Dan Rather Reporting, NCAA Football, Notre Dame Football, NCAA Basketball and NFL Football). The spring schedule begins the AICPA Annual Report Posted to Web Site week of Mar. 19 and ends the week of Apr. 9. In addition to the radio ads, the image enhancement effort fea­ The AICPA’s annual report for the fiscal year Aug. 1, 1999, tures a more targeted print campaign. Full-page ads will appear in through July 31, 2000, has been posted to our Web site in PDF format. Included in the report is a “Year in Brief’ section, a let­ BusinessWeek (weeks of Nov. 6, Nov. 20 and Dec. 4); Time Top ter to members from former AICPA Chair Robert K. Elliott and Management (weeks of Nov. 6 and Nov. 27); and Fortune Small President & CEO Barry C. Melancon, a report on activities of Business (month of Dec.). Print ads will run again in the spring, the Institute, as well as the AICPA’s financial statements. from the week of Feb. 26 through the week of Apr. 23. Complementing the national image enhancement campaign, www.aicpa.org/about/annrpt/homepage.htm

most of the state CPA societies will run local radio, print and

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Furthermore, affiliate language that was from firms the potential smaller Shielding Regarding the SEC’s proposed proxy While desired “appearance” language We We worked hard to help the SEC amend statement disclosures, we expect disclosure include include a that statement the audit committee looked at all these services and fees in con­ independence. firm audit sidering sizes and members in business and industry will be dropped. Firms and organizations over an IT engagement. Thus, there would and and serve the public interest, and are hope­ to be at a high level non-audit IT fees other items: fees, and audit and focus on threefees. In addition, the disclosure would especially troubling for CPA firms of all therefore will be able to continue to affiliate historically. done have they as others with advanced by achieved, the improvement AICPA over expected. theis proposal will SEC original not be be no blanket ban on IT services. on ban be no blanket crippling crippling effect of the new rule was—and is outsourcing audit internal an and area nology business. small for exist will out carve —a high priority. Here’s what we achieved in in achieved we what Here’s priority. high —a be it easy should firms: for smaller particular for them to comply in the information tech­ about the benefits, market value and imple­ its its original proposal to uphold audit quality ful that our key concerns bewill reflected in the final rule. Look to an upcoming Letter released. is being designed to inform all membersmentation of the proposed credential—as it is not a CPA credential, nor a replacement for it, but an entirely new considered credential.as well. Members’ feedback on the initiative will be

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Significantly, Significantly, the 10 originally proposed However, based However, on oral negotiations that Information Information technology consulting would Firms Protected Fall Council Resolution Moves Global Credential Initiative Forward SEC Votes on Auditor Independence Rule; Small Commissioners of the Securities and some some of the movement toward the compro­ address address many major ofprofes­ the AICPA’s concerns ( public interest and sional of wording final the concept”; “in was a vote took place prior to the vote, I can discuss eliminating services, outsourcing audit internal By Richard I. Miller, AICPA General AICPA Counsel Secretary& Miller, I. RichardBy Exchange Commission voted unanimously Nov. 15 on a compromise to its rule proposedon auditor independence that appears to the rule is expected this month and any spe­ cific comments have to await our review of rule. written the One, One, advocacy, would be eliminated; seven would be as presently restricted. In the area of internal audit outsourcing, up to 40% of for businesses be would allowed outsourcing an exemption for businesses with less than $200 million in assets, smaller rule. CPA final the by firms unaffected be should the the major problems caused by the proposed affiliate language, and trying to prohibit an arbitrary approach based on “appearance” points. these of all on made was mise. Our key issues included avoiding a Letter, with with $200 million or more in assets. Under that can generally be described as assuring management decision making and control factors. We believe considerable progress blanket ban on information technology and the AICPA and state CPA societies to be be permissible by meeting a series of tests With the governing Council’s passage of a prohibited prohibited service areas would be modified. comprehensive communications program is ued participation in the development of the Letter, launch a member-education campaign. A resolution authorizing the contin­ AICPA’s new global business credential

Vol. 80 No.80 Vol. 10 The CPA Letter CPA The A News Report to Members to Report News A December 2000 2000 December Highlights SSARS No. 8 Amending Amending No. 8 SSARS Issued; No. SSARS 1 2 Changes Announces HUD and Reporting Program to 5 Turn”; to .Where “AICPA.. 3 Draft Exposure Issues ISB Independence Auditor for Comer” “Chair’s 3 Audit Requirements Audit Services Updated Directory of Directory Updated on Conceptual Framework Framework on Conceptual 4 Practice Aid Developed Practice 6 Tax Regarding Alert Activities Planning 8 Eligibility in Changes Personal for Requirements Up Open Credential More Members to Program Financial Specialist Specialist Financial

A merican Institute O f C ertified Public A c c o u n t a n t s 2 T he CPA L etter • D ecember 2000

Send Us Your E-Mail Address hotline. Each year the national newspaper forms of business alliances is considered and the AICPA team up for a one-day tax helpful. If you have not submitted your e-mail hotline that offers readers an opportunity Applicants should have 9 to 12 years of address to us or have changed it to get immediate answers from the experience in public accounting or its recently, send your e-mail address tax experts. CPAs get the chance to equivalent, with at least 3 to 6 years as a to [email protected]. Indicate “e- news provide a valuable public service manager. They also are required to submit mail address update” in the subject during tax season, and the profes­ a 10- to 15-page essay on one of several header field to help us process the briefs sion is showcased through coverage topics as part of the application process. If submissions more efficiently. Be of the event in the following day's interested, you must submit a resume; sure to include your full name, and, if paper. Volunteers work three-hour shifts: Standard Form 171, “Personal known, your membership number on the 9:00 a.m. to noon, noon to 3:00 p.m., 3:00 Qualification Statement,” or Form OF-612, e-mail message. Be assured the AICPA p.m. to 6 p.m., and 6:00 p.m. to 9:00 p.m. “Optional Application for Federal will not sell your e-mail address to outside Let us know if you would like to help staff Employment,” or any other written format third parties. the hotline at USA Today’s headquarters in that clearly identifies the announcement Rosslyn, Va., right outside of Washington, number, title, series and grade of the job HUD Announces Changes to D.C. Food and parking are provided, but, for which you are applying; and at least Program Reporting and Audit unfortunately, travel expenses cannot be two letters of recommendation from non­ Requirements reimbursed. relatives. Forms 171 and OF-612 and “Applying for a Federal Job” (which high­ Lynn Drake, 202/434—9214 The U.S. Department of Housing and lights the information to be included in Urban Development has announced plans your resume or other written submission) [email protected] to change program reporting and audit can be obtained from the Office of requirements for multifamily program par­ Personnel Management, SEC, 450 Fifth ticipants. Effective for project fiscal years SEC Seeks Accounting Fellows Avenue, NW, Washington, DC 20549. OF- ending on Dec. 31, 2000, and thereafter, 612 also is available online at the HUD Real Estate Assessment Center The Securities and Exchange www.opm.gov. Inquiries should be (REAC) will require independent auditors Commission’s Office of the Chief addressed to E. Michael Pierce in the to perform an attestation agreed-upon pro­ Accountant is accepting applications for Office of the Chief Accountant at: cedure engagement under AICPA two Professional Accounting Fellow posi­ Statement on Standards for Attestation tions. This highly successful program is 202/942- 4400 Engagements No. 4 where the auditor designed to provide outstanding opportuni­ compares the electronically submitted data ties for personal development and career [email protected] in the REAC staging database to the hard enhancement. During their two-year terms, copy of the audit report and financial data fellows work directly with the Chief schedule required by REAC (as is cur­ Accountant, and are involved in the study PUBLIC MEETING NOTICES rently required for public housing authori­ and development of rule proposals under ties). Auditors also will be required to the federal securities laws, liaison with For detailed agendas, dial 201/938-3787 obtain a unique auditor identification num­ professional accounting standard-setting from a fax machine and key in document ber from REAC. Additional instructions bodies, and consultation with registrants no. 1206 two weeks prior to these meetings. and guidance will be made available on the on accounting and reporting matters. Both HUD REAC Web site at: fellow positions begin in June 2001. The Accounting Standards Executive SEC is looking for one individual with a Committee: Dec. 11-12, Orlando, Fla.; www.hudgov/reac/products/prodmf.html background in accounting for financial Feb. 1-2, New York instruments and experience with financial Auditing Standards Board: Dec. Volunteers Needed for 2001 institutions, and one for a position that is 13-14, Tempe, Ariz. USA Today Tax Hotline not weighted toward a particular back­ ground although familiarity with account­ Other Meetings CPA volunteers are needed to staff the ing for consolidations, revenue recogni­ Peer Review Board: Jan. 8-9, 2001, San Mar. 1, 2001, (Thursday) USA Today tax tion, business combinations, and other Antonio, Tex.

The CPA Letter (ISSN 0094-792x) December 2000, is published monthly, except bimonthly Feb./Mar. and July/Aug. Publication and editorial office: 1211 Avenue of the Americas, New York, NY 10036-8775, 212/596-6200. Periodicals postage paid at New York, NY and at additional mailing offices. Copyright © 2000, American Institute of Certified Public Accountants, Inc. Postmaster. Send address changes to The CPA Letter, Circ. Dept., Harborside Financial Ctr., 201 Plaza Three, Jersey City, NJ 07311-3881. The CPA Letter— Online is available at http://www.aicpa.org. Geoffrey L. Pickard, Vice President— Communications Ellen J. Goldstein, Editor e-mail: [email protected] D ecember 2000 • T he CPA L etter 3

SSARS No. 8 Amending SSARS No. 1 Issued — Documenting an understanding with the entity through the use of an engagement letter, preferably signed by manage­ The Accounting and Review Services Committee has issued ment, regarding the services to be performed and the limita­ Statement on Standards for Accounting and Review tions on the use of those financial statements. Services No. 8, Amendment to Statement on The committee believes that by offering these com­ Standards for Accounting and Review Services No. accounting munication options when performing a compilation, 1, Compilation and Review of Financial Statements & auditin g the accountant will use his or her professional judg­ (No. 060661 CPA12). ment about the type of communication options SSARS No. 8 will make fundamental changes to news appropriate for the client, provide a quality service the way in which accountants view the compilation and respond to the needs of clients. engagement. It creates new options for accountants when per­ SSARS No. 8 is effective for financial statements submitted forming compilation engagements in which the financial state­ after Dec. 31, 2000. To obtain a copy, contact the Member ments are not expected to be used by a third party, and also Satisfaction Center (see page 6; price: $8.50 member, $10.50 allows the accountant to use his or her professional judgment in non-member). SSARS No. 8 will also be available for a limited­ dealing with the client. Some of the major changes are: time free trial period on CPAWeb.org, in the AICPA Professional • Revising the definition of submission. By modifying the Literature section, under What’s New. definition of submission, the majority of the applicability problems that the profession is facing would be solved. Under SSARS No. 8, submission of financial statements is Practice Aid for SSARS No. 8 Developed defined as “presenting to a client or third parties financial The AICPA has developed a companion Compilation and statements that the accountant has prepared either manually Review Alert titled, Practical Guidance for Implementing or through the use of computer software.” Although practi­ SSARS No. 8, How to Understand and Apply the tioners will still have to use their professional judgment to Amendments to SSARS No. 1, Compilation and Review of determine if they have prepared and presented a financial Financial Statements (No. 022274CPA12). This alert statement, this modification was the best way to address includes an overview of SSARS No. 8, suggests ways of today’s technological environment, while still maintaining a implementing the standard, points out pitfalls that frequently minimum level of service. occur in compilation engagements, and provides a series of • Under SSARS No. 8, if an accountant submits financial state­ questions and answers to help implement SSARS No. 8. ments to a client that are not expected to be used by a third Obtain the companion Compilation and Review Alert party, the following communication options are available: through the Member Satisfaction Team (see page 6; price: — Issuing a compilation report in accordance with reporting $14.95 member, $20.95 non-member). requirements of SSARS No. 1.

Exposure Draft on Unconsolidated Real Estate ISB Issues Exposure Draft on Conceptual Investments Released Framework for Auditor Independence An exposure draft of a proposed statement of position, The Independence Standards Board has issued an exposure draft Accounting for Investors’ Interests in Unconsolidated Real of a proposed conceptual framework for auditor independence Estate Investments, has been issued by the Accounting Standards (ED 00-1, Proposed Statement of Independence Concepts: A Executive Committee. The proposed SOP would provide guid­ Conceptual Framework for Auditor Independence). The pro­ ance on accounting for investors’ interests in unconsolidated real posed framework will guide the ISB in setting sound and consis­ estate investments in financial statements prepared in confor­ tent standards for auditors of public companies, and assist other mity with generally accepted accounting principles. A final SOP independence decision makers in resolving questions about would be effective for fiscal years beginning after Dec. 15, 2001 independence in the absence of ISB standards and other rules. (though earlier adoption is encouraged), and it would supersede The framework will also serve as a basis for evaluating existing SOP 78-9, Accounting for Investments in Real Estate Ventures. independence rules and practices. The ED suggests a model for Because the proposed SOP would replace SOP 78-9, and decision makers that includes an evaluation of threats and safe­ SOP 78-9 has been more broadly applied to investments other guards to independence, an assessment of independence risk, than real estate, those interested in accounting for investors’ analysis of the costs and benefits of regulation, and considera­ interests in unconsolidated investments in other than real estate tion of the views of investors, other users, and other interested are encouraged to comment on the proposed SOP. parties. Comments are due Apr. 15, 2001. To obtain a copy of the Comments are due Feb. 15, 2001. Obtain a copy of the expo­ exposure draft, visit: sure draft at: www.aicpa.org/members/div/acctstd/edo/index.htm www.cpaindependence.org 4 4T he CPA L e t t e r • D e c e m b e r 2000

Individual CPAs who either practice Committee on Regulation of the across state lines or who serve clients in Profession to introduce the concept of other states electronically would not be substantial equivalency and enact it into required to obtain an additional reciprocal state law have been met with skeptical or temporary license, if they hold a resistance. valid license from another state While most states agree with the ratio­ c hair's and if their state is deemed sub­ nale behind substantial equivalency, stantially equivalent — or if they fewer than 15 have been able to enact the c orner are individually deemed substan­ provision. As substantial equivalency has tially equivalent. been discussed across the country, many Any CPA who relocates to another state boards of accountancy have felt state and establishes a “principal place of uncomfortable allowing CPAs, duly business” or office in that state would be licensed in another jurisdiction, into their required to obtain a license in that state. state without having to submit to recipro­ By Kathy G. Eddy, CPA Likewise, if a CPA firm opens an office in cal licensing procedures. The stumbling Chair, AICPA Board of Directors a state, the firm must obtain a license in block for many of these states has been I am devoting this column to an issue that that state. notification — the form and frequency. you will hear me talk about often during At the request of the state boards, a Many of these state discussions have my year as chair — implementation of the National Association of State Boards of additionally focused on the need for a fee core provisions of the Uniform Accountancy Qualification Appraisal associated with substantial equivalency. Accountancy Act (UAA), and specifically, Service will make determinations of equiv­ These are healthy discussions and raise the concept of “substantial equivalency.” alency on a state-by-state basis. Currently, pertinent issues. However, they are issues As many of you may know, I have spent using the NASBA service, nearly 40 states that can be reconciled if we are to achieve the better part of my professional career have been determined to meet the criteria our goal of implementing substantial focusing on regulation of the profession for substantial equivalency. equivalency on a uniform and compre­ — as state society president, as a member With the substantial equivalency crite­ hensive basis. and chair of the West Virginia Board of ria in place, a state must insert “enabling Now is not the time to stop the dia­ Accountancy and as volunteer leader of language” within their accountancy logue. Now is the time to continue to push the AICPA. I believe this issue is a critical statute or regulations that will allow CPAs for breaking down the barriers that pre­ link in helping us to achieve the Vision for from other substantially equivalent states vent practice across state lines. the profession, as members in all seg­ to practice within their state without I chaired the National Steering ments would be impacted. obtaining a license or reciprocal certifi­ Committee for nearly three years, and cate. This “enabling language” also pro­ during that time I spoke personally to Why it’s Important vides for the discipline of those practicing Substantial equivalency is the “core idea” dozens of states regarding the implemen­ under substantial equivalency. Model tation of substantial equivalency. I com­ that will allow CPAs to practice across enabling language is embedded in the mend the states that have moved toward jurisdictions easily. It is a model legislative UAA, as Section 23. The concept of sub­ enacting this core provision of the UAA. I provision, and was first introduced into the stantial equivalency cannot work if the know being at the forefront of change is Uniform Accountancy Act-Third Edition in state does not enact language like that never easy. Jan. 1998. In light of the globalization of found in Section 23. When I spoke at NASBA’s Annual business and technology's effect on the abil­ Meeting in Sept., I challenged the partic­ ity of CPAs to serve clients regardless of Where We Stand; Why We Must Do More It seems unbelievable to me that at a time ipants to remember the big picture and their physical location, the concept of sub­ when economic barriers are coming the pivotal role the UAA will play in bal­ stantial equivalency is a crucial contribution down between countries and even conti­ ancing professional requirements and to the profession and the public it serves. nents, states and jurisdictions refuse to do public interest needs in the years ahead. How it Works the same. Daniel Webster said it well: “Our proper Under the concept, if a CPA has a valid When substantial equivalency was first business is improvement. Let our age be license from a state with CPA licensing introduced in Jan. 1998, the leadership of the age of improvement...” I challenge criteria that are “substantially equivalent” both the AICPA and NASBA committed all of you to work with your state soci­ to those outlined in the UAA, then the to making it a quick reality. Because of eties and state boards of accountancy in CPA can cross state lines to practice in the critical need for ease in reciprocity implementing substantial equivalency. another state without obtaining a license and mobility, staff and volunteer resources May this be the age of improvement in in that state. However, the CPA must were committed to enacting substantial state regulation. notify the state board of his/her intent to equivalency in 40 states by the end of the practice and agree to follow the law and year 2000. But, unfortunately, joint efforts rules in that state. of the AICPA/NASBA National Steering [email protected] D e c e m b e r 2000 • T he CPA L e t t e r 5

AICPA... Where to Turn

All address and job change information should be mailed, faxed or Member Programs and Benefits 201/938-3269 e-mailed to the Member Satisfaction Center in New Jersey. (The CPA Member Satisfaction Center (until 7:00 p.m., ET) 888/777-7077 Letter and Journal of Accountancy will automatically be updated. Indicate (Orders, membership records, subscriptions, customer any other AICPA subscriptions that you have.) service, conference registration, network licenses) Fax number 800/362-5066 AICPA, New York 212/596-6200 E-mail [email protected] Fax number 212/596-6213 Voice mail box for comments 888/999-9252 AICPA, New Jersey 201/938-3000 Minority Initiatives 212/596-6227 Peer Review 201/938-3030 Fax number 201/938-3329 Personal Financial Specialist Designation 201/938-3099 AICPA, Washington 202/737-6600 PFP member section 201/938-3659 Fax number 202/638-4512 The Practicing CPA (editorial) 201/938-3798 AICPA/PDI, Texas 888/247-3277 Professional Ethics, Ethics Hotline 888/777-7077 AICPA Political Action Committee 202/434-9276 Public Relations and Communications 212/596-6106 Academic and Career Development 212/596-6222 Software (AICPA products) 800/226-5800 Recruiting for the Profession 212/596-6105 State Legislation 202/434-9201 Advertising (Journal of Accountancy, The Tax Adviser) State Society Relations 202/434-9257 Classified ads 800/237-9851 Tax Services Member Section 202/434-9270 Display ads 212/596-6093 The Tax Adviser (editorial) 201/938-3444 Accounting and Review Services 212/596-6026 Technical Information Hotline [email protected] Accounting Research Association 201/938-3277 (auditing and accounting practice inquiries) 888/777-7077 Accounting Standards 212/596-6166 Women and Family Issues 212/596-6226 Accredited in Business Valuation Designation 201/938-3653 Audit & Accounting Guides 201/938-3339 Affinity Programs Auditing Standards 212/596-6036 Insurance Programs Benevolent Fund 201/938-3490 Aon Insurance Services Center for Excellence in Financial Management 212/596-6157 Disability 800/223-7473 Center for Investment Advisory Services 877/66-AICPA Group 800/223-7473 Committee Appointments 212/596-6097 Group Variable Universal Life 800/223-7473 Consulting Services Member Section 212/596-6065 Life (Member/Spouse) 800/223-7473 (Clip (Clip for reference)- Copyright Permissions 201/938-3245 Long-Term Care 800/223-7473 CPA Client Bulletin, CPA Client Tax Letter Personal Liability Umbrella 800/223-7473 — Subscriptions 888/777-7077 Medicare Supplement Plan 800/749-6983 — Editorial 201/938-3301 Automobile 800/847-2886 Home The CPA Letter (editorial) 212/596-6112 800/847-7233 Professional Liability, CPA EmployerGard 800/221-3023 CPA WebTrustsm 888/999-9257 Retirement Programs CPE Course Information/Conference Registration 888/777-7077 T. Rowe Price 800/38-AICPA Division for CPA Firms Great-West Variable Annuity 800/355-1608, ext. 20 PCPS/The Alliance for CPA Firms 800/CPA-FIRM Car Rental (Hertz, CDP #12353) 800/654-2200 SEC Practice Section 201/521-5579 Compensation Research Examinations (Uniform CPA Exam) 800/CPA-EXAM (ERI Assessor Series; Key Code 5245) 800/627-3697 Federal Government (regulatory matters) 202/434-9253 Computers (Dell Corporation) 800/568-8313 Federal Legislation (non-tax congressional matters) 202/434-9205 Credit Card (First USA Bank) 800/254-0910 General Counsel 212/596-6245 Credit Card Processing (Paymentech) 888/213-8445 Government Member Inquiries 212/596-6034 Employment Referral Service (RésuméMatch) 800/837-1804 Industry Member Programs, Management Home Mortgages and Equity Loans (Wells Fargo) 800/272-1210 Accounting 212/596-6157 IBM (Priority Code 6B8XB032; Value Code CAP) 888/426-5800 Information Technology Member Section 212/596-6211 Investor Information Products (Standard & Poor’s) 800/221-5277 International Technical Services 212/596-6250 KnowledgeSpace® (Arthur Andersen) 888/577-8778 Joint Trial Board (disciplinary actions) 212/596-6101 Long-Distance Telephone (Sprint) 800/953-4214 Journal o f Accountancy (editorial) 201/938-3292 Overnight Delivery (Airborne Express) 800/MEMBERS Library/Center for Knowledge and Research Services 888/777-7077 Professional Placement (Robert Half) 888/744-4089 Fax number 201/938-3955 Tax Research Material (RIA Group) 800/431-9025, ext. 3 Web Site Set-Up/Hosting (AdvisorSquare) 800/251-3863 Management of an Accounting Practice 800/CPA-FIRM Xerox Corporation (#0706109) 800/275-9376, ext. 272 Meetings and Travel 201/938-3232

New York New Jersey Washington, D.C. AICPA/PDI, Texas 1211 Avenue of the Americas Harborside Financial Center 1455 Pennsylvania Avenue, NW 1720 Lake Pointe Drive New York, NY 10036-8775 201 Plaza Three Washington, DC 20004-1081 Suite 117 X Jersey City, NJ 07311-3881 Lewisville, TX 75057 6 T he CPA L etter • D ecember 200 0

As a result of investigations of alleged violations of the Code of Under the automatic disciplinary provisions of the Institute’s bylaws, Professional Conduct of the AICPA and/or state CPA societies, the following members have had their AICPA memberships: the following ethics cases have been resolved by settlement —Terminated because of a final judgment of conviction for a agreement under the Joint Ethics Enforcement crime punishable by imprisonment for more than one year: Program: • Julius L. Heard of Canton, Tex., effective Aug. 10, 2000. — Terminated following revocation of their CPA certifi­ Brian M. Huggins of Belleville, Ill., disciplinary cates, licenses and/or permits by their state accountancy expelled from membership in the AICPA, actions boards: effective Sept. 19, 2000. • Kimberly K. Suber of Morehead City, N.C., effective Aug. Patrick J. Rubey of Chicago suspended from membership in 10, 2000. the AICPA and the Illinois CPA Society for six months, • Max J. Vandament of Salina, Kan., effective Sept. 12, 2000. effective Sept. 18, 2000. Richard H. Valade of Austin, Tex., suspended from member­ Details on these disciplinary actions can be accessed through: ship in the AICPA and the Michigan Association of CPAs for www.aicpa.org/pubs/cpaltr/index.htm two years, effective Sept. 21, 2000.

Special Discount. StockOpter from Net knowledge, the program is nontechnical ment. Call for a free trial issue (CD: No. Worth Strategies, Inc. (No. 016165CPA12) without being too simplistic. It is an excel­ GTTECDCPA12; audiocassette: No. simplifies the complicated and time-con­ lent way for non-IT professionals to gain G03000CPA12). Price: $199 member; suming task of determining the best strate­ the insight and advice needed to accomplish $499 non-member. gies for exercising your clients’ employee business goals with IT. Call for a free trial stock options. Based on Microsoft Excel®, issue (CD: No. GTBUCD- _____ Updated — Accountant’s StockOpter allows you to run and save CPA12; audiocassette: No. Business Manual (No. numerous simulations for each of your GTBUACCPA12). Price: $199 now 029418CPA12) has long been clients. Price: $625.50 member; $695 non­ member; $499 non-member. the trusted, one-stop resource member. available for thousands of CPAs who www.NetWorthStrategies.com/De New Edition — For more need quick answers on a broad mo_Getter/Download_SOAICPAf than 50 years, Accounting range of business questions orm.htm for free demo download Trends & Techniques (No. that arise in everyday work. This just- 009892CPA12) has provided up-to-date updated edition features a 2000/2001 Special Discount. Dynamic Insurance financial statements and auditors’ reports Toolkit on CD-ROM containing both new Solutions from Financial Profiles, Inc. that CPAs in both public practice and and updated practice aids from the Manual. (No. 016162hsCPA12) helps financial industry have used for guidance to Recognized authorities Bill Behrenfeld, planners and advisers better explain the improve their reporting performance. Bob Ranweiler and Andy Biebl lend their complex inner workings of life insurance Featured are reporting methods of 600 top expertise to this two-volume loose-leaf best policies to their clients. Through vividly industrial, merchandising, technology and seller. Price: Save 20%—$138 member illustrated graphics, and based upon differ­ service corporations in the country. Newly (regular price $172.50); $151.80 non-mem­ ent sets of assumptions, clients can added are the practices of New Economy ber (regular price $189.75). instantly see and “interact” with what hap­ companies, including dot-com and pens to cash values and death benefits telecommunications firms. Price: $89.95 throughout the life of all types of policies. member; $112.95 non-member. To order, write: AICPA Member Price: $300 member; $595 non-member. Satisfaction Team, CPA 12, P.O. Box Now in CD format. Also available to 2209, Jersey City, NJ 07303-2209; fax, Special Discount. Talking Business: The members at a substantial discount and now 800/362-5066; call 888/777-7077 (8:30 IT Connection is a monthly audio program in CD format is Talking Technology from a.m. to 7:00 p.m., ET); or e-mail mem­ from Gartner Group now available to mem­ Gartner Group. This monthly audio pro­ [email protected]. Prices do not include bers at a substantial discount. Designed gram is a perfect fit for CPA consultants shipping and handling. Have mem­ especially for business professionals to and IT professionals who need to stay bership number ready. increase their information technology ahead in the rapidly changing IT environ­ continued from page 1 — Global Credential Initiative an analysis of the implications for student enrollments, is being Until then, members can visit www.aicpa.org for information on developed. If Council is in agreement with the information and the credential, including the international consortium’s “white paper” proposed bylaw changes, it may authorize a membership ballot at and an article on how the credential adds value to the profession. the spring meeting. Under that scenario, ballots would be mailed In addition, information for Council’s review at its May 2001 in late summer. Continue to watch The CPA Letter for much meeting, such as a business plan with market research results and more on this exciting initiative as it progresses. D ecember 2000 • T he CPA L etter 7

Three New WebTrust Standards Debut As part of a continuing effort to make the WebTrust program more among other benefits, greater flexibility in constructing engagements responsive to the electronic commerce marketplace for and more competitive pricing, as well as a broader set licensees and their clients, three new WebTrust stan­ of standards to meet the needs of business-to-business dards have been released for exposure: the WebTrust and application service provider e-commerce markets. Security Principles and Criteria, the WebTrust Business assurance The documents for the new principles and criteria Practices and Transaction Integrity Principles and services can be downloaded at aicpa.org/webtrust/index.htm. Criteria, and the WebTrust Availability Principles and If you have any questions or comments regarding Criteria. These are the newest standards to be released these new standards, contact Sheryl Martin at under Version 3.0 of the WebTrust Program. Version 3.0 offers, 201/938-3751 [email protected].

Alert Regarding Tax Planning Activities Certain recordkeeping and filing require­ not apply to all our members, it is equally section 6112 listing regulations. If it ments imposed by temporary regulations clear that their scope includes transactions appears that any of these regulations issued earlier this year may apply to you that are not normally thought of as “tax apply to you, in addition to studying the and/or your clients as a result of your tax shelters.” regulations in detail, you might want to planning activities. These temporary regu­ Flowcharts, together with explanatory read the AICPA’s comments on these reg­ lations are commonly referred to as the notes, are being posted to the AICPA’s ulations (found at the URL provided) and “tax shelter regulations,” but do not be Web site (see URL below) to assist you an article in the Aug. 2000 issue of The deceived by the “tax shelter regulations” in determining if some or all of these reg­ Tax Adviser (see page 568). title; the regulations can apply to ordinary ulations are likely to apply to you. We tax planning services and transactions. urge you to take a look at them, particu­ www.aicpa.org/members/div/tax/ Although it is clear these regulations do larly at the chart and notes relating to the index.htm Tax Season Volunteers Make a Difference and Are Needed For more than a century, lawyers and doctors have enhanced their If you are in a supervisory position, consider a tax-deductible professional lives and distinguished themselves by giving their donation or alert your staff to the volunteer possibilities and services to the needy at no charge. Each individual CPA also can encourage them to participate. Some CPAs have been doing this participate in a similar way. Each of us can make a difference. for as long as 30 years, showing there are ways to fit in a few vol­ Across the country, more and more active and retired CPAs unteer hours, even during busy season. Many view this as an from all segments of the profession—public, business and indus­ important part of their professional responsibility. try, government, not-for-profit, and education—make the time to Some of the programs may also offer accounting and consult­ help low-income people with their tax returns. They do this during ing services. (For the non-tax programs in other areas of the coun­ tax season and their services are free. Many of the volunteers have try, contact Accountants for the Public Interest at 410/837-6533.) tax experience but others are full-time auditors or accountants and Baltimore, Maryland Volunteer Lawyers Service, 410/539-6800, find they benefit by helping others.. .as they learn. x230; [email protected] The services range from tax return preparation to representa­ Boston, Community Tax Aid of Boston, 617/572-7983; tion before the IRS and state tax agencies. The people they help [email protected] are the working poor and retirees. Many do not speak English. Colorado, Colorado CPA Society, 303/773-2877; This is a growing difficulty as our federal and state tax laws and [email protected] forms grow more complex, especially for people who have not Detroit, Accounting Aid Society, 313/647-9620; accaidsociety@ done anything to complicate their tax lives. mindspring.com; Web: www.accountingaidsociety.org Listed below are tax clinic programs led by tax professionals. Illinois, Center for Law and Human Services, 312/341-1666; They are looking for volunteers for next tax season who are CPAs [email protected] or who work for CPAs. Each program is nonprofit and operates Minnesota, AccountAbility Minnesota, 651/287-0187; independently; some offer training programs that qualify for CPE [email protected]; Web: www.accountabilitymn.org credit. Several of the programs are now funded as Low-Income New York City, Community Tax Aid, Inc., 917/402-7563; Tax Clinics and work with many legal aid and law school pro­ [email protected] grams to provide professional tax help to the poor. San Francisco, Tax Aid, Inc., 415/281-1600; Tax-Aid@ A surprising number of the low-income tax returns are complex us.arthurandersen.com and need a professional’s advice. The volunteer work is without Washington, D.C., Community Tax Aid, Inc., 703/318-2122; risk of preparer penalty since the definition of “preparer” requires [email protected]; Web: www.gwscpa.org/cta compensation. It is a great way both to help in your community W. Hartford, Conn., Community Accounting Aid and Services, and for new staff to gain experience. 860/570-9113; [email protected]; Web: asbdcnow.com/caas 8 T he CPA L e t t e r • D e c e m b e r 2000

Changes in Eligibility Requirements for Personal Financial Specialist Credential Open Up Program to More Members Next month a new set of guidelines — developed by the PFS doctor and masters of business administration, are considered, as Credential Committee and the PFP Executive Committee under well. Participation on the committees of nationally renowned per­ the auspices of the National Accreditation Commission — will sonal financial planning associations also counts. take effect for earning the AICPA's Personal Financial Specialist Although all PFS candidates still are required to pass an exami­ credential. While the previous eligibility requirements centered on nation, the AICPA will recognize exams other than the Institute's passage of the AICPA's PFS exam and specified hours of experi­ PFS exam. Those others are: Certified Financial Planner, ence in PFP activities during the three years preceding the exam, Chartered Financial Consultant, Chartered Financial Analyst, and the centerpiece of these new guidelines is a new “point system” the NASD Series 65, Series 66 and Series 7 exams. that encompasses a broad definition of business experience (which Each of the three areas — business experience, lifelong learn­ now includes teaching), provides for a new lifelong learning com­ ing and examination — requires a minimum number of “points” to ponent, and recognizes other “PFP related” exams. be earned. To attain the PFS credential, candidates must demon­ Relevant business experience involves six financial planning strate evidence of earning 100 points across the three areas. An disciplines: the personal financial planning process (goal setting), assessment tool is being developed to help candidates determine personal income tax planning, risk management planning, invest­ their qualifications for the PFS accreditation. ment planning, retirement planning and estate planning. It also Other application criteria apply (e.g., AICPA membership in includes the teaching of college-level personal financial planning good standing, unrevoked CPA certificate). The AICPA will courses — which helps to open up the credential to members in launch an online PFS application/assessment tool in Jan. at: academe. Lifelong learning embraces both traditional (standard CPE http://pfs.aicpa.org courses) and non-traditional (self-directed reading and research) methods. It also includes conference presentations and profes­

[email protected] for more information sional writing credits. Advanced academic degrees, such as a juris

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