CPA letter, 1996

              AICPA
American Institute of Certified Public
Accountants
January/February 1996 Vol. 76 No. 1
The CPA Letter
A News Report to Members
Highlights of What’s Inside
Members Alerted to Deductibility of AICPA Dues 2
SAS Nos. 77-78, SSAE Nos. 5 and 6, New Edition of SOP 92-9, Audit Guide Issued 3
FASB Issues
Statement on
Not-for-Profit
Investments
4
Special Supplement: Professional Growth Through New Assurance Services
5-8
Court Rules Against Florida Board of Accountancy in IDS Case 9
AICPA Has Major Plans for Tax Policy Study 12
Fight for Work Load Relief Continues 12
This issue of The CPA Letter combines the months of Jan. and Feb. The next issue will be published in Mar.
Securities Litigation Reform Bill
A big victory The accounting profession, led for the by AICPA Key Persons and the
profession national firms, won a big victory when the Senate and the House of Representatives voted to override President Clinton’s veto of the securities litigation reform bill (H.R 1058). The legislation is now the law of the land.
Many members of the business commu­nity, particularly start-up businesses and high- technology firms whose fluctuating stock prices had made them prime targets for frivo­lous shareholder class-action lawsuits, pushed Congress hard to pass H.R. 1058. They, as well as CPAs and other professional advisers, believe balance and fairness had to be restored to a legal system clearly broken.
H.R. 1058 implements a system of pro­portionate liability so that peripheral defen­dants—like the independent auditor—pay only their fair share of a judgment. Plain­tiffs’ attorneys will no longer simply be able to tap defendants’ “deep pockets”; they will
Members Will Soon Be Asked to
Ballots Around the end of this month, scheduled to AICPA members will receive be mailed ballots asking them to approve within a several bylaw changes that the month governing Council decided at
its fall 1995 meeting it wants to make. Members will be asked to vote on how the AICPA President is elected, the composi­tion of the Joint Trial Board, the length of time petitions to amend the bylaws may remain outstanding, and changes in the sta­tus of the AICPA Secretary.
As it stands presently in the bylaws, the AICPA President must be elected by a vote among members of Council. The Council thinks it more appropriate for the AICPA Board of Directors, which is elected by Council, to be empowered to elect the President, primarily because of timing. For example, three months went by between the board’s approval of Barry Melancon in Feb. and the Council’s meeting in May. The Council says that such a delay could jeopar­dize the availability of candidates and inhibit
Now Law; Veto Overridden
be forced to focus on the merits of the case. Moreover, the bill ensures that any CPA engaged in knowing fraud is still subject to the full force of joint and several liability. It also guarantees that small investors are enti­tled to full recovery from every defendant. Another key provision of the bill requires rapid notification to the SEC by auditors of illegal acts that have not been properly addressed by management. A number of provisions will prevent abusive practices— for example, a ban on bounty payments to lead plaintiffs and on the payment of plain­tiff referral fees.
The AICPA long supported this bill and believes it will restore sanity and fairness to the legal system. “This victory was possible because of the years of tireless efforts of CPAs around the country fighting for litigation reform,” said AICPA President Barry Melancon. “Their belief that the voice of CPAs can be heard and that this profession is a force to be reckoned with deserves our applause and thanks.”
Vote on Several Bylaw Changes
the process directed to securing the best person for the job. In addition, since the AICPA Secretary is no longer a board-level position, it is recommended that the AICPA Secretary be elected by the board as well.
Members will also be asked to decide whether membership on the Joint Trial Board should be restricted to present and former members of Council, or open to any member who has been a member of the AICPA for at least five consecutive years prior to appointment to the Joint Trial Board. Expanding eligibility to serve on the Joint Trial Board, the Council says, would allow for a greater pool and diversity of members and would facilitate empaneling a trial board that is representative of the membership on the particular issue presented at the hearing.
The Council also seeks to impose a cap of one year on petitions to amend the bylaws, starting from the date signed by the member, with the exception of petition efforts that were ongoing as of July 13, 1995.
continued on page 4