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Connecticut board approves high-level response to AICPA exposure draft on alternative practice structures
Summary
The Connecticut State Board voted to submit a high-level response to an AICPA exposure draft on alternative practice structures, saying the draft is overly complex and does not sufficiently protect independence-of-appearance; the letter will be submitted before the April 30 deadline.
The Connecticut State Board voted to submit a high-level response to an AICPA exposure draft on alternative practice structures, citing concerns that the proposal is too complex and could hinder consistent enforcement and the appearance of auditor independence.
The board’s chair, speaking to members, said Connecticut regulations (section 2280-15C) adopt the AICPA Code of Professional Conduct as the state’s professional standard, so any AICPA interpretations could affect licensees and be grounds for discipline under state statute. "This code and any interpretations and ethical rulings by the AICPA shall apply to all of our licensees and certificate holders," the chair said, arguing that the exposure draft’s complexity would make operational oversight difficult and that guidance should be simplified.
The chair, who identified himself as the chair of NASBA’s Regulatory Response Committee, said NASBA is coordinating comment from state boards but encouraged states with views to submit their own letters. He noted the exposure draft asks 18 specific questions but said the Connecticut board’s letter should remain high level. "It is complex. We don't understand it. We think you should go back to the drawing board and simplify it," he said.
Board members reinforced concerns that the draft does not give sufficient weight to appearance-of-independence issues and expressed alarm about provisions that would allow a nonattest entity to determine compensation for attest partners. One member recounted that when a nonattest tax employee with management-committee influence pressured audit staff over going-concern and goodwill impairment issues, audit discussions became strained and judgment could be compromised. "Don't forget, I'm on the management committee when the management committee determined comp," the member said in describing the dynamic that led to undue pressure.
Members debated whether to answer the draft’s 18 questions in detail or to submit a shorter critique. Several said responding point-by-point might be interpreted as tacit acceptance of the exposure draft’s framing and would be resource-intensive. The board agreed a concise, high-level submission coordinated with NASBA’s efforts would be preferable.
A member moved to submit the drafted letter on behalf of the board and another seconded. The chair called for a voice vote; no members voiced opposition and the motion passed. The chair said the response is due by April 30 and that he would send the letter and an email copy to board members for their records.
The board’s action leaves the matter on record with NASBA and the AICPA process; NASBA is expected to circulate more detailed operational feedback separately. The board did not adopt any new rule language at the meeting and took no enforcement action beyond approving the letter.
