President's Message

Marja Beltrami, CPA

September! Fall, a time for reflection. Or at least one would hope so. It feels like there is never a good time to catch your breath and reflect. There is so much that could and should be done during the fall. This is the time to:

1.       Review your client list, for those in public practice, and grade them. Then review the C and D clients to see how we can assist them into being B and A clients.

2.       Review your accumulated CPE credits and ensure you and staff have enough before the year runs out.

3.       Ensure you have attended a valid Alaska ethics class as this is a renewal year.

4.       Have you caught up on all the new changes coming down the pipeline for audit, review & compilation services? There are plenty.

5.       Are you aware of the changes coming to the Alaska Statues and Regulations for mobilization and firm ownership? (This month’s monthly meeting will be reviewing this! Get your RSVP in to Linda!)

6.       For tax clients we need to review our client list and prepare for yearend planning and tax estimates.

7.       Review our engagement letters and ensure they are edited and prepped for the new year which is just around the corner.

8.       Review the possibility of value billing verses the time honored timesheets and billable time.

9.       Reviewed your succession plan lately?

10.   Ensure your technology and software is as current as possible, and make any switches while its “slow”.

The list just goes on. Accounting firms or individual professions (for those in industry) aren’t successful by chance. I know we are all hard workers and, by nature, attentive to details. All of us must reevaluate our operations, and take steps to fortify and move forward.

Hopefully you are taking advantage of the number of areas of support, information and tools available to us all. From membership in the AICPA to our own State Society and a large number of committees and round tables available to participate in. Review some of the manuals and the notes you took from some of the CPE you already took this year. Are there things you already know you would like to implement?  Have you toured the internet lately?  Spend some time google-ing and investigating. There is a lot out there.  You are the key. You must avail yourself to these opportunities. Find the time, make the time.

Sometimes it seems overwhelming, but taking the time to investigate these areas and getting involved with others on similar quests can be quite invigorating and beneficial.  So I encourage you all to pick a couple areas and commit to getting to it.

“Difficulties are meant to rouse, not discourage.” ~ William Ellery Channing

“Whether you believe you can do a thing or not, you are correct.”  ~ Henry Ford

“The moment we definitely commit ourselves, providence moves too. All sorts of things occur to help one that never otherwise would have occurred.” ~ Goethe

“If you are not ready today you will be even less so tomorrow” ~ Publius Oviduius Naso

“ if there is no dull and determined effort, there will be no brilliant achievement.” ~ Hsun-Tzu

Why am I a member of the AKCPA?

Amy Cooper, Board of Directors

As a member of the AKCPA, I have an opportunity to give back to the profession that has given me so much. The Society has also enabled me to develop contacts with CPAs around the state. I like knowing that if I have a question or need some assistance, there are people with years of experience and knowledge willing to help. I find this especially beneficial as an educator who believes in a strong bond between the Society and the students who will one day become part of this profession.

NASBA, AICPA and Prometric Announce Successful Launch of
US CPA Exam at International Test Sites

Dear NASBA Members,

The National Association of State Boards of Accountancy, Inc. (NASBA), the American Institute of Certified Public Accountants and Prometric today announced the successful launch of the U.S, CPA Examination in international locations – the first time in history it has been administered outside of the United States and its territories.

On August 1, the first candidates took the exam in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates. Throughout the remainder of the month, 1,165 candidates will sit for 2,065 examination sections. Future month-long testing windows will take place in November, February, May, and every third month thereafter.

The U.S. CPA exam is offered internationally as a service to foreign nationals in response to escalating international demand for U.S. CPA licensure. In 2010, more than 10,000 international candidates traveled to the U.S. to take the U.S. CPA exam, a 22 percent increase from 2009. Nearly one-third of international candidates came from Japan.

The international exam, offered in English, is the same as the U.S. exam administered by the AICPA, NASBA, and Prometric in the United States. Licensure requirements for international candidates are the same as for U.S. CPA candidates. Along with passing the Uniform CPA Examination, international candidates must meet educational and experience requirements as mandated by U.S. state boards of accountancy.

In the United States, state boards have the governmental legal authority to award the U.S. CPA license. Applications may be made through certain U.S. state boards of accountancy offering eligibility for international candidates. A list of participating state boards and information about fees is posted here.

Testing in the new international locations is open to citizens and long-term residents of the countries in which the exam is being administered. In the Middle East, citizens of Egypt, Jordan, Oman, Qatar and Saudi Arabia may take the exam in one of the Middle East locations. U.S. citizens living abroad are eligible to test at any location.

An international testing FAQ sheet is available at the AICPA Uniform CPA Examination website – www.aicpa.org/cpa-exam.

AICPA Recommends SEC Allow Optional Adoption of IFRS by U.S. Public Companies

The American Institute of Certified Public Accountants has recommended to the Securities and Exchange Commission that U.S. public companies be allowed the option of adopting use of International Financial Reporting Standards as the commission weighs a possible future framework for incorporating IFRS into the U.S. financial reporting system.

“Whether or not the SEC decides to incorporate IFRS into the U.S. financial reporting system through an endorsement/convergence approach, we believe U.S. issuers should be given the option to adopt IFRS as issued by the IASB,” Paul V. Stahlin, AICPA chairman, and Barry C. Melancon, AICPA president and CEO, said in a four-page letter to the SEC.

“An adoption option would provide a level of consistency in the treatment of U.S. companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of U.S. companies that elect IFRS with their non-U.S. competitors that use IFRS.  Furthermore, giving U.S. companies an option to adopt IFRS as issued by the IASB would be another important step towards achieving the goal of incorporating IFRS into the U.S. financial reporting system.  Anecdotal evidence suggests that the number of companies that would choose such an option would not be such that system-wide readiness would become an issue,” Stahlin and Melancon said.

The SEC’s request for comments on incorporating IFRS into the U.S. financial reporting system sets the stage for a possible decision by the commission later this year that may set parameters for convergence of IFRS with U.S. Generally Accepted Accounting Principles and a phased timeline for U.S. adoption of IFRS.

“The AICPA supports the goal of a single set of high quality, comprehensive financial reporting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world.  We believe one common financial reporting language would benefit investors, as well as issuers and capital markets, because it would facilitate the comparison of reporting entities domiciled in different countries.  We believe the standards issued by the International Accounting Standards Board (IASB) are best positioned to become those global standards.  We, therefore, agree with the objective outlined in the Staff Paper that a U.S. issuer compliant with U.S. generally accepted accounting principles (GAAP) should also be able to represent that it is compliant with IFRS as issued by the IASB,” Stahlin and Melancon said.

A copy of the letter is below.

If you have questions or would like to speak to someone about the letter, contact Bill Roberts, AICPA director of media relations at wroberts@aicpa.org, or 202-434-9266.

August 17, 2011

Ms. Elizabeth M. Murphy

Secretary

U.S. Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549-1090

Re: File No. 4600 Commission Statement in Support of Convergence and Global Accounting Standards

Dear Ms. Murphy:

The American Institute of Certified Public Accountants (AICPA) is pleased to offer its comments on the Securities and Exchange Commission’s May 26, 2011 SEC Staff Paper, Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers—Exploring a Possible Method of Incorporation.  The AICPA is the world’s largest association representing the accounting profession, with nearly 370,000 members in 128 countries.  AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting; membership is also available to accounting students and CPA candidates.  The AICPA sets ethical standards for the profession and U.S. auditing standards for audits of private companies, nonprofit organizations, and federal, state, and local governments.  The AICPA also develops and grades the Uniform CPA Examination.  The AICPA, through a recently announced joint venture with the Chartered Institute of Management Accountants of London with 183,000 members, will begin offering a new Chartered Global Management Accountant (CGMA) credential in 2012 to advance the professional practice of management accounting in the U.S. and worldwide.

We commend the SEC Staff for issuing the Staff Paper for public comment.

Objective of Endorsement Method

The AICPA supports the goal of a single set of high quality, comprehensive financial reporting standards to be used by public companies in the preparation of transparent and comparable financial reports throughout the world.  We believe one common financial reporting language would benefit investors, as well as issuers and capital markets, because it would facilitate the comparison of reporting entities domiciled in different countries.  We believe the standards issued by the International Accounting Standards Board (IASB) are best positioned to become those global standards.  We, therefore, agree with the objective outlined in the Staff Paper that a U.S. issuer compliant with U.S. generally accepted accounting principles (GAAP) should also be able to represent that it is compliant with IFRS as issued by the IASB.

Option to Adopt IFRS

Whether or not the SEC decides to incorporate IFRS into the U.S. financial reporting system through an endorsement/convergence approach, we believe U.S. issuers should be given the option to adopt IFRS as issued by the IASB.  An adoption option would provide a level of consistency in the treatment of U.S. companies and foreign private issuers that report under IFRS that does not exist today, and would facilitate the comparison of U.S. companies that elect IFRS with their non-U.S. competitors that use IFRS.  Furthermore, giving U.S. companies an option to adopt IFRS as issued by the IASB would be another important step towards achieving the goal of incorporating IFRS into the U.S. financial reporting system.  Anecdotal evidence suggests that the number of companies that would choose such an option would not be such that system-wide readiness would become an issue.

Endorsement

We pragmatically accept the concept of an endorsement approach for the incorporation of IFRS into the U.S. financial reporting system and the retention of the Financial Accounting Standards Board (FASB) as the U.S. standard setter to facilitate the incorporation of IFRS into U.S. GAAP.  We note, however, that there are practical challenges that could limit the effectiveness of the proposed methodology in achieving the SEC’s objective.  Those challenges and some possible solutions are noted below.

Practical Challenges

The Staff Paper suggests that an endorsement approach would give the SEC and FASB the ability to modify or supplement IFRS, subject to an established protocol.  This ability, if applied imprudently, will not result in dual (IFRS and U.S. GAAP) compliance.  Furthermore, it could, and likely will, result in many differences from IFRS as compared with other developed nations.  Accordingly, we suggest that the threshold for modifications to IFRS be set high so that, as stated in the Staff Paper, modifications would be a rare occurrence. We would be pleased to offer further thoughts to the Commission if and as it develops those protocols.

We support prospective application of the endorsed standards wherever possible, because prospective application would minimize the cost and effort to implement new requirements.  We note, however, that prospective application is incompatible with IFRS 1, First-time Adoption of International Financial Reporting Standards.  IFRS 1 generally requires retrospective application with certain specific exceptions and exemptions.  Without modifications to IFRS 1, U.S. issuers would not be able to unequivocally state compliance with IFRS.  Accordingly, we would encourage the SEC and its staff to work with the IASB to accommodate the needs of U.S. issuers in making the transition to IFRS.

Transition

We have concerns about the endorsement process for IFRSs not subject to standard setting (the Category 3 standards).  We believe that a long, drawn-out process of endorsing Category 3 standards one-by-one would be costly, disruptive, and create confusion for many constituents.  For many companies, particularly smaller issuers, constant changes to accounting requirements over a period of several years would create considerable hardship.  Accordingly, after completion of the MoU priority projects, we recommend an endorsement process that would incorporate IFRSs not subject to standard setting into U.S. GAAP for public companies at one point in time, with a date certain for adoption.

We could envision under this approach that IFRSs subject to standard setting (Category 2) could be incorporated into U.S. GAAP at a later date, as the standards are issued by the IASB.

We also believe that, to the extent possible, FASB and IASB should work closely on the timing of new IFRSs to be issued during the U.S. transition in the interest of assuring an orderly transition in the U.S.

Regulatory Environment

As stated previously in our response letters related to the incorporation of IFRS into the U.S. financial reporting system,[1] any transition to IFRS in the U.S. needs to be a comprehensive undertaking.  If IFRS are to serve as a basis for U.S. issuers financial reporting, there must be changes in the auditing and regulatory environments.  IFRS are less detailed than current U.S. GAAP, and they require more judgment in the application of accounting principles.  Therefore, second-guessing of reasonable professional judgments of preparers and auditors would need to be minimized in order for IFRS to be viable in the U.S.

Further, we continue to encourage the Public Company Accounting Oversight Board to purse a strategy that will achieve greater harmonization of its auditing standards with International Standards on Auditing issued by the International Auditing and Assurance Standards Board.

Role of FASB

We agree that FASB should continue to have an active role in the international financial reporting arena to assist in the development of high-quality international financial reporting standards, to be proactive in identifying new and emerging financial reporting issues, and to ensure that U.S. interests are suitably addressed in the development of those standards.  We also agree that the FASB should continue to be the body designated to promulgate U.S. GAAP for public companies.

We believe FASB’s role should be focused on working with the IASB in the development of high-quality financial reporting standards and on developing authoritative implementation guidance and interpretations with the IASB.  We are concerned that separate educational guidance issued by the FASB will be viewed as authoritative even though it is not intended to be authoritative.  Any necessary implementation or interpretive guidance should be developed as part of the standard setting activities with the IASB.  The development of educational materials should not be a central mission of the FASB.

Privately Held Companies and Not-for-Profit Entities

A central theme of the Staff Paper is the retention of U.S. GAAP and incorporation of IFRS into the Accounting Standards Codification through an endorsement process.  The framework as outlined in the paper would directly affect U.S. GAAP for public and private entities, so this issue needs to be addressed.  As it relates to private companies, we support the recommendations of the Blue Ribbon Panel on Private Company Financial Reporting for establishment of a separate board for developing exceptions and modifications to current U.S. GAAP for private companies.  If a separate board was established, FASB could focus on the endorsement of IFRS into the U.S. financial reporting system for public companies in a more effective and efficient way.

The AICPA appreciates the opportunity to submit its comments and would be pleased to discuss them with you at your convenience.

Sincerely,

AICPA

Paul V. Stahlin, CPA

Chairman of the Board

Barry C. Melancon, CPA

President and CEO

[1] See our comment letter on the August 7, 2007 SEC Concept Release on Allowing U.S. Issuers to Prepare Financial Statements in Accordance with International Financial Reporting Standards