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Get in line: CPAs face new set of CBA regs. (Cover Story).

Article Excerpt
CPA's Across a Wide Spectrum of Practice Areas Are Facing a New Spate of Regulations from the California Board of Accountancy

What Do They Mean for You?

As the Sarbanes-Oxley Act flexes its muscles nationally, California CPAs also are weathering their own regulatory climate. The California Board of Accountancy is proposing new regulations that will effect CPAs across a spectrum of practice areas. For some, the regulations may spell changes, such as to a firm's standard engagement letter or documentation practices. For others, it may mean exiting a market segment.

CHANGE IS A WAY OF LIFE

Nearly every aspect of a CPA's practice has changed, is changing or is being reviewed for possible change, both nationally and at the state level, says Bruce Allen, CalCPAs director of government relations.

"California's Board of Accountancy was already one of the strongest consumer-focused boards in the nation," Allen says. "With the proposed regulations and recently passed statutes, it has a whole new set of requirements and tools at its discretion--and more are planned."

Regulations concerning audit documentation, financial statement restatement reporting and non-CPA ownership recently passed by the CBA will take effect once approved by the Office of Administrative Law. The regulations clarify laws that have been in effect since Jan. 1, 2003.

Though the effect of these regulations on the profession remains to be seen, one thing is certain: These laws are on the books and cannot be ignored.

"To some degree, what's being asked of the profession, maybe we should've come up with by ourselves a while ago," says John Dodsworth, president, director and co-founder of CAMICO. "The public, the juries, they're the people who really make the rules."

And those rules "will be called a verdict," says Ron Klein, JD, CFE and vice president of claims at CAMICO. "Some of these issues have been practice management issues that have been left up to the individual firms. But that freedom is now going away."

HARSHER THAN SOX?

While Sarbanes-Qxley has...