Compilations: The Story Goes On

Journal of Accountancy, May 1999 | Go to article overview

Compilations: The Story Goes On


The perennial debate at the AICPA over "plain paper"--indeed, over the definition of plain paper and the nature of compilations--continues to flourish, but for the time being there are no new regulations or even exposure drafts. Nevertheless, the world is not standing still. Florida submitted--with as much grace as possible--to court decisions that radically changed the nature of the] profession. In fact, the Sunshine State skipped ahead of the AICPA and recently created a fourth level of reporting applicable to both CPAs in traditional firms and those working in new types of entities, such as American Express. What changes appear in Florida's regulations? And what more might the new players in this game ask for? The Journal presents a report at "half-time."

Assembled statements and airborne swine

In mid-1998, after multiple trips to court, the state of Florida found itself having to cope with licensed CPAs working in unlicensed entities (see "We've Seen the Future, and It's Florida," JofA, Sept.98, page 13). Back in 1996, however, Lloyd "Buddy" Turman, executive director of the Florida Institute of CPAs (FICPA), had said that all these changes had about as much chance of happening as pigs learning to fly. In a November 1998 statement, he had to backpedal: "As you periodically scan the skies, remember it's not a bird, it's not a plane--it's a pig flying in Florida!" So what are the changes? For one, the Florida State Board of Accountancy created a fourth level of service--the assembled statement--that has standards but provides no assurance. The board allows both CPAs in alternative structures and those in traditional firms to perform assembled statement engagements. In Turman's words, "`Assembled financial statements' provide for the output of manual or automated bookkeeping or data processing services in the form of financial statements." "Assembly" includes preparation of a working trial balance, assisting in adjusting the books of account and consulting on accounting matters. The issuing entity must print the transmittal letter on its letterhead. The FICPA has posted an explanatory article by Turman as well as the text of the regulatory changes online at www.ficpa.org.

"Are the new definition and creation of `assembled financial statements' the perfect world scenario?" asked Turman. "Absolutely not!" However, he said it was the best solution, given court orders. Turman did tell the Journal in the September article, "I think every state that finds itself in the same position as Florida will be forced to adopt our model."

So is it a done deal?

In spite of what has already occurred, all is not settled for the AICPA, NASBA or even Florida. Much depends on what happens with the Uniform Accountancy Act. The UAA is a model for states to adopt, and it could change the public accounting statutes of most states (parts of the UAA will be introduced in many state legislatures tins year). The CPA profession has an interest in the extent to which it is adopted; so does a group calling itself the Coalition for Affordable Accounting (CAA), which includes such well-known consolidators as H&R Block, American Express and Century Business Services. …

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