Academic journal article Journal of Accountancy

AICPA Clarifies Concurring Partner Role

Academic journal article Journal of Accountancy

AICPA Clarifies Concurring Partner Role

Article excerpt

"Right now, we'll live with it," said Richard Miller, AICPA general counsel and secretary of the board of directors, when asked about the Supreme Court's denial of Robert D. Potts' petition for review of a federal appeals court's decision. The court upheld an SEC sanction against Potts for recklessness as a concurring partner. (See "CPA Sanctioned on Concurring Review," JofA, Dec.98, page 20.) Even though Miller was disappointed by the May 3 decision, he was not surprised. "The Supreme Court gets a lot of cases and hears only a small percentage of them. On another day, it may take on a case like Potts."

Despite this setback, the profession can at least look forward to clearer guidance in the future. The auditing standards board (ASB) and the SEC practice section (SECPS) of the AICPA division for CPA firms have been working on new procedures for concurring partner reviews with the SEC's blessing. With general agreement on a concurring partner's review responsibilities, an issue such as that raised by the Potts case is not likely to recur.

The AICPA had filed an amicus curiae brief supporting Potts, who was given a nine-month suspension by the SEC for his role in the 1988 and 1989 audits of Kahler Corp., a hotel operator. Potts, who at the time was a partner at Touche Ross and its successor Deloitte & Touche, signed off on the audits. His "improper professional conduct" stemmed from the accounting treatment of University Park Hotel (a 1987 acquisition of Kahler's), which resulted in incorrect net gain and loss realization, erroneous classification of the interest as an asset for sale and improper application of accounting method dates. …

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