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Board adopts staff recommendation to maintain proposed regs requiring firms to disclose attest-signing authority to clients and peer reviewers
Summary
The California Board of Accountancy voted to maintain the proposed regulatory text for California Code of Regulations, Title 16, sections 41 and 50.1, which require accounting firms providing attest services to disclose if no owner is authorized to sign attest reports and to notify clients of the name and license number of the authorized signer.
The California Board of Accountancy on March 20 adopted staff'recommended responses to public comments and voted to maintain the proposed regulatory text for California Code of Regulations, Title 16, sections 41 and 50.1.
Regulatory staff said the amendments address issues identified when accounting firms composed solely of CPAs with only "general accounting experience" provide attest services. The proposed rules would require firms that provide attest services to disclose to peer reviewers when no owner is authorized to sign attest reports and, for attest engagements, to include in engagement letters a client notification naming the CPA and license number authorized to sign the attest report on the firm's behalf.
The board considered six public written comments received during the public comment period and a public hearing that produced no oral comments. Staff recommended rejecting the comments insofar as they were outside the scope of the rulemaking or did not warrant changes; staff proposed one clarifying revision to a response to a commenter (not to the regulation text) to state appreciation for support on the rulemaking but to note the specific suggestion was unrelated to the scope.
Motion and vote: Board member Joe Rosenbaum moved to adopt staff'recommended responses and maintain the proposed text for sections 41 and 50.1 as noticed; Patricia Bachelor seconded. The board carried the motion by roll-call vote.
Why it matters: The regulations are intended to make firm ownership and attest-signing authority transparent to peer reviewers and clients, addressing situations where attest services are performed but no owner within the firm is authorized to sign attest reports.
Next steps: Staff will finalize the final statement of reasons and take steps to complete the rulemaking process, including necessary clearances with other state agencies; the board authorized the executive officer to make technical and non-substantive edits as needed.
