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The Uniform Accountancy Act--an adventure into the land of uniform state laws.

The Uniform Accountancy Act -- An Adventure Into the Land of Uniform State Laws

The AICPA/NASBA Joint Model Accountancy Bill finalized in October 1984 has taken on some revisions and a new name. Prepared by the AICPA/NASBA Special Committee on the Model Accountancy Bill, an executive summary released in November 1990 changes the name from the Model Bill to the Uniform Accountancy Act, frequently shortened to the Uniform Act. According to the executive summary, the change in the title was made to emphasize the goal of uniformity and to reflect the broader scope of the revisions to the 1984 joint AICPA/NASBA model bill.

Late in the spring of 1990 the AICPA's Model Public Accountancy Bill Task Force released an extensive summary in discussion draft form of the changes it recommended to the 1984 joint model bill. The task force changes were approved for release and comment by AICPA's State Legislative Committee and were presented at AICPA's board of directors meeting in April. The task force draft did not suggest a change in the bill's name at that time. The name change from Model Accountancy Bill to Uniform Accountancy Act came later.

In general, the AICPA task force recommendations followed the recommendations contained in the 107-page report released earlier for comment by AICPA's Committee on Governance and Structure. The seed of the idea for a uniform accountancy act germinated in the Special Committee on Governance and Structure, since its report recommended a permanent joint AICPA/NASBA liaison committee to discuss ways to achieve uniformity in all aspects of state licensing, relicensing and regulations.

What is the difference between a model bill and a uniform act? Are these two terms synonymous or almost the same? When we think in terms of uniform legislation, our attention is drawn to legislative enactments such as the Uniform Commercial Code (UCC) adopted by all of the states with insignificant or minor changes (if any) so that the document is essentially the same in each state. Uniform state laws are not variable. Rather, they are conforming or consonant, that is, they are in agreement.

On the other hand, a model bill may strive for uniformity because the purpose of the model is to serve as an example or pattern for imitation or emulation. A model bill is a bill that the drafters hope the legislature would propose as worthy of imitation even though the legislature finds it necessary to alter in some degree the dimensions of the model to fit the state situation. A uniform act does not admit deviation by the state legislature. Where there is deviation from the uniform act, the goal of uniformity is, of course, not achieved.

Aside from the unattainable goal of a uniform accountancy act, which is the identical accountancy law in all of the jurisdictions, what else is there in the now so-called uniform act that carries warning signals to unlicensed independent practicing accountants or to the licensed non-CPA?

For starters, language has been added to the definition of practice of public accountancy to include financial planning. This will affect licensed public accountants but will have no effect on the unlicensed practitioners.

The 150 semester hour requirement including a baccalaureate degree will become the minimum requirement to apply for the CPA examination. Additionally, the education requirements must be met before an applicant is eligible to apply for the CPA examination. The 150 semester hour recommendation conforms to the AICPA membership requirement effective in the year 2000 and is already statutory in 13 states. This will have the effect of reducing considerably the number of candidates eligible to apply for the CPA examination. At the same time, in the states where those requirements become statutory, we can look for an increase in the number of non-certified, independent practicing accountants because of the restrictions to entry to the profession as a licensee.

It is interesting (and perhaps encouraging) to note that the prohibitions of Section 14, Unlawful Acts, remain unchanged from the original model. It is not the performance of the accounting service by the unlicensed accountant that is prohibited. What the 1984 model prohibits is the issuance of a report where unlicensed accountants prepare financial statements (compiled or reviewed). Such preparation may not be followed by the issuance of a report as defined in Section 3(i) of the model.

Section 14(i) continues to prohibit an unlicensed person from using the title "accountant" in connection with any language (including the language of a report that implies that the person holds a permit or has special competence as an accountant). Accordingly, this section prohibits unlicensed persons from signing their reports using the title "accountant" but does not prohibit unlicensed persons from using the title "accountant" on their shingle or directory listing. The question remains unclear as to whether the unlicensed accountant would be permitted to sign the report as an "accountant" and then attach a qualifier or caveat that he/she was not licensed in the particular state, pursuant to the U.S. Supreme Court decision in Peel.

To our knowledge, no state has adopted the 1984 model in its entirety. Massachusetts has probably come closer to enacting more unchanged sections of the 1984 model than any other.

What has happened is that many of the state boards finalized as regulations various sections of the 1984 model that suited their convenience. The definitions in Section 3 of the model can be found, in many instances word-for-word, among the regulations of a fair number of states. Thus, the restrictive definition of "report" in Section 3(i) has become law through the state's administrative process rather than its legislative process.

Calling a model bill a uniform act does not make it so. The writers of the exposure draft express the hope that the name "Uniform Accountancy Act" will advance the goal of uniformity within the profession. It is highly unlikely that such objective is achievable. After expressing their hope to advance the goal of uniformity, the writers of the exposure draft revert to the boiler plate language of the 1984 model and, in the explanatory note about format, admit that the uniform act, while comprising the complete text of a statute, is adaptable to piece-meal adoption. This is contrary to what a uniform act is all about.

If the AICPA task force really wants a uniform act (as opposed to a model bill), the place to start is with a complete revision of the "note about format" that precedes the text. The task force has drafted either a model bill or a uniform act. As we said above, calling a model bill a uniform act doesn't make it so. Despite the numerous references throughout to "Uniform Accountancy Act," the November 1990 exposure draft is nothing more than an effort to bring the 1984 AICPA/NASBA Joint Model Accountancy Bill in line with the recommendations of AICPA's Special Committee on Governance and Structure.

William H. Sager Legal Counsel
COPYRIGHT 1991 National Society of Public Accountants
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Washington Comment
Author:Sager, William
Publication:The National Public Accountant
Article Type:column
Date:Feb 1, 1991
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