New addition added to the safe harbor letter language
On August 1st, California Board of Accountancy proposed new language to be added to the safe harbor letter.
Gary Anspach, EA has been active on this issue and voiced CSEA's concerns today. Here is his summary of what ocurred this morning (9/22/11):
To: CSEA legislative Affairs Committee, CSEA Directors/Officers, Chapter Presidents, Other CSEA Leaders
Re: Safe Harbor letter – preparation of financial statements
I attended the California Board of Accountancy (CBA) meeting this morning via their webcast.
Moments ago, the CBA approved the following additions to the safe harbor letter language:
“We [I] are [am] not licensed nor required to be licensed by the California Board of Accountancy for the preparation of these financial statements. If compiled, reviewed or audited financial statements are desired, the services of someone licensed by the California Board of Accountancy would be required.”
These approved changes were referred to the CBA “rulemaking process”.
Some comments of interest:
- The attorney for the CBA warned that it was a “risky proposition to regulate” unless there are misleading or untrue statements. She reminded the CBA that the California Supreme Court (Bonnie Moore vs. the CBA) provided two options for disclaimer: I am not required to be licensed and these services do not require a license. She also stated that the courts tend to support businesses and anything that would unnecessarily threaten a business could lose in a challenge.
- It was also mentioned by a member of the CBA that the Supreme Court voted 4-3 in this case to require any disclaimer.
- Another CBA member suggested that it was not prudent “to go to war with their limited resources” over this language.
- The NSA Executive Director spoke in opposition to adding “compilation” in the approved new language.
- The CBA seemed to believe that since SARS regulates compilation, review and audit, they all should be mentioned.
I will provide additional comments and perceptions at the meetings in Sacramento.
Gary
