What would the cost of one bad piece of legislation cost you as CPA or CPA firm?

That was a point of discussion at a recent meeting of managing partners in Maryland. Many were shocked to know that the FTC penalty was $3,500 per incident, or the added cost and administrative burden of filing for multiple state licenses to file tax returns ($100 – $300 per CPA/Staff per state), or the NY proposed registration ($100 per CPA/Staff), or even the Maryland Tax Preparer law ($250 per CPA/staff/year) in tax area.

What about Congress taking over Financial Accounting Standards setting by FASB?

The unknown costs of complying with the new federal Consumer Financial Protection Agency (CFPA)?

We are being swamped by tsunami of new legislation, regulation, and standards to the point many CPAs are felling completely overwhelmed. Here is an update on the latest developments and some success by the Professional Associations advocating for CPAs (AICPA, MACPA and many other State CPA Societies).

Here are the top five issues you should be paying attention to:

1. Wall Street Reform & Consumer FInancial Protection Agency Act of 2009 (HR 4173)
2. FTC “Red Flags” rule
3. NY Tax Preparer Licensing
4. International Accounting Standards (IFRS) and pending SEC roadmap
5. Looming budget crises and deficits in states may bring tax increases and new policies like taxing services (Accounting & tax), gross receipts, combined reporting, etc) – See  Maryland legislative agenda for 2010

Here is what we accomplished in our advocacy efforts so far:

1. Wall Street Reform and CFPA – some major victories!
2. • CPAs are exempt from this bill (eliminating additional & costly compliance) 
   • Eliminated proposed amendment to takeover “FASB” standard setting
   • Increased liability for CPAs thru the “aiding & abetting amendment” was eliminated
   • Eliminated amendment that would have created a new regulator for all financial planners (CPAs who are CFPs/PFSs, etc) was changed to a study
   • Requirements for PCAOB registration & inspection of all auditors of broker-dealers was changed to exempt introducing (non-custodial) broker-dealers
   • Amendment to eliminate exemption for audits of internal controls (SOX 404(b)) for smaller public companies was NOT approved
3. FTC “red Flags” rule – significant progress – thirty State CPA societies and the AICPA in a full court press resulted in a six-month delay in implementation of this onerous rule that caught CPAs who do taxes and other services in its net. The delay gives us time to work on the exemption or resources to make it easier to deal with.
4. NY Tax Preparer registration – 12/31/09 registration requirement was eliminated! NY Governor, David Paterson signed the bill late last week – another example of the power of Associations working in your behalf.
5. IFRS road map expected from SEC by December 21st – you can expect some significant changes in US GAAP (new major standards changes) as the FASB – IASB project works through their convergence project by 2011
6. Sales tax on accounting & tax services is expected to show up in the upcoming 2010 session in Maryland

Here are four (4) things every CPA can do to deal with the tsunami:

1. Support membership in AICPA and your state CPA Society (MACPA) – We work together and your license is regulated at both federal & state level
2. Contribute to the Profession's Political Action Committees (MACPA & AICPA)
3. Support & Attend CPA Day in Annapolis on January 20, 2010
4. Support & Attend the MACPA CPA Member Summit on June 18th & 29th and the swearing-in ceremony for New CPAs and build our relationship withe DLLR & our State Board of Public Accountancy

Keep in mind, there is still a Senate version and the risk of more amendments – we are watchinig this closely and will activate our extensive grassroots network of CPAs if necessary.

Get our your surfboard, it's gonna be a wild ride on this tsunami of change!

Here are some great resources for more in-depth coverage of these major issues:

More Vortex – And Maybe a Way Out– AAO weblog

House passes sweeping reforms – CPA Success

FTC Delays enforcement of Red Flags rule – CPA Success

NY exempts CPAs from Tax Preparer Registration – CPA Success

HR 4173 Wall Street Reform and Consumer Financial Protection Agency Act of 2009– FEI blog

House Passes Regulatory Reform – Journal of Accountancy

House Passes Financial Regulatory Reform Bill – Web CPA