B-148144, MAY 28, 1975

B-148144, MAY 28, 1975

PRECIS-UNAVAILABLE

ABRAHAM A. RIBICOFF, UNITED STATES SENATE:

WE ARE WRITING IN RESPONSE TO THE LETTER OF FEBRUARY 20, 1974, FROM SENATOR SAM J. ERVIN, JR., THEN CHAIRMAN OF THE COMMITTEE ON GOVERNMENT OPERATIONS AND THE JOINT LETTER OF JULY 23, 1974, FROM SENATOR ERVIN AND SENATOR LEE METCALF, CHAIRMAN, SUBCOMMITTEE ON REPORTS, ACCOUNTING AND MANAGEMENT. THOSE LETTERS EXPRESSED CONCERN OVER OUR RECOMMENDED POLICY ISSUED IN SEPTEMBER 1970, WHICH STATED THAT AFTER DECEMBER 31, 1975, ONLY CERTIFIED PUBLIC ACCOUNTANTS (CPAS) AND THOSE PUBLIC ACCOUNTANTS LICENSED BEFORE DECEMBER 31, 1970, SHOULD BE ENGAGED TO MAKE AUDITS OF FEDERALLY CHARTERED, FINANCED, OR REGULATED PRIVATE ORGANIZATIONS. IN 1972 WE INCLUDED THIS POLICY IN OUR "STANDARDS FOR AUDIT OF GOVERNMENTAL ORGANIZATIONS, PROGRAMS, ACTIVITIES & FUNCTIONS" AND THEREBY GAVE IT A BROADER APPLICATION.

IN MAKING OUR RECOMMENDATION ON THIS MATTER, WE WERE NOT UNMINDFUL THAT WE ARE NOT SPECIFICALLY AUTHORIZED TO PRESCRIBE THE PROFESSIONAL QUALIFICATIONS FOR PUBLIC ACCOUNTANTS TO DO GOVERNMENT WORK AND THAT OUR RECOMMENDATION WAS ONLY ADVISORY. THE STANDARDS IN OUR RECOMMENDED POLICY BECOME MANDATORY ONLY WHEN PRESCRIBED BY A STATUTE OR INCORPORATED IN AGENCY REGULATIONS, AND THEN ONLY IF FEDERAL FUNDS ARE INVOLVED. HOWEVER, WE RECOGNIZE THAT OUR RECOMMENDATION IS INFLUENTIAL.

FOR THE PAST FEW MONTHS WE HAVE BEEN RECONSIDERING THE RECOMMENDATION WE MADE ON THIS SUBJECT. WE HAVE NOW COMPLETED OUR RECONSIDERATION AND ARE PRESENTING OUR CONCLUSION IN THIS LETTER FOR YOUR INFORMATION. WE REACHED OUR CONCLUSION ONLY AFTER THE MOST CAREFUL DELIBERATIONS AND AFTER CONSIDERING A GREAT AMOUNT OF MATERIAL PROVIDED TO US BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND THE NATIONAL SOCIETY OF PUBLIC ACCOUNTANTS.

BECAUSE THIS IS AN IMPORTANT MATTER, WE PRESENT BELOW THE MORE ESSENTIAL FACTS WE CONSIDERED AND THE BASES FOR OUR CONCLUSION.

REASONS FOR GAO'S INVOLVEMENT

OUR STATUTORY RESPONSIBILITIES INCLUDE SURVEILLANCE OVER THE EXPENDITURE OF FEDERAL FUNDS INCLUDING THOSE MADE AVAILABLE TO STATE AND LOCAL GOVERNMENTS THROUGH GRANTS AND REVENUE SHARING. OUR RESPONSIBILITIES FURTHER INCLUDE PROVIDING INFORMATION ON SUCH EXPENDITURES TO THE CONGRESS.

IN CARRYING OUT THESE RESPONSIBILITIES, WE USE THE WORK OF OTHER AUDITORS, INCLUDING THAT PERFORMED BY PUBLIC ACCOUNTANTS; THEREFORE WE HAVE A GREAT INTEREST IN BEING SURE THAT SUCH AUDITORS DO SATISFACTORY WORK FOR FEDERAL AGENCIES AND FOR STATE AND LOCAL GOVERNMENTS INVOLVED IN ADMINISTERING FEDERAL PROGRAMS.

BY ISSUING THE STANDARDS CITED ABOVE, WE HOPED TO ENCOURAGE AUDITORS WHO DO WORK FOR ALL LEVELS OF GOVERNMENT TO PERFORM AUDITS THAT WOULD BE AS USEFUL AS POSSIBLE IN AIDING CONGRESSIONAL OVERSIGHT OF THE USE OF FEDERAL FUNDS AND TO INCREASE FEDERAL RELIANCE ON WORK DONE BY OR FOR STATE AND LOCAL AUDITORS. ACHIEVING SUCH OBJECTIVES REQUIRES A HIGH LEVEL OF PERFORMANCE BY AUDITORS.

GOVERNMENTAL ENTITIES PROVIDE SOME OF THE MOST DIVERSE AND CHALLENGING WORK IN THE ACCOUNTING AND AUDITING FIELD. ACCORDINGLY, GOVERNMENT DEPARTMENTS AND AGENCIES NEED THE BEST AUDIT SKILLS OBTAINABLE. AUTHORIZING AUDITORS WHO HAVE NOT DEMONSTRATED THAT THEY POSSESS SUCH SKILLS TO RENDER OPINIONS ON FINANCIAL STATEMENTS WILL NOT PROVIDE THE PUBLIC WITH THE PROTECTION IT NEEDS.

THE ISSUE

THE FIELD OF PUBLIC ACCOUNTING SERVICES IS A BROAD ONE. PUBLIC ACCOUNTANTS OFTEN PROVIDE BOOKKEEPING SERVICES, ASSISTANCE IN INCOME TAX MATTERS AND EXPERT ACCOUNTING SERVICES, AS WELL AS PERFORM AUDITS THAT LEAD TO RENDERING OPINIONS ON FINANCIAL STATEMENTS.

OUR RECOMMENDATION RELATES ONLY TO THE LATTER; THAT IS, THE FUNCTION OF AUDITING FINANCIAL ACCOUNTS AND TRANSACTIONS AND EXPRESSING AN OPINION ON WHETHER AN ORGANIZATION'S FINANCIAL STATEMENTS FAIRLY PRESENT ITS FINANCIAL CONDITION AS OF A GIVEN DATE AND THE RESULTS OF ITS OPERATIONS FOR AN ACCOUNTING PERIOD ENDED ON THAT DATE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED OR WITH OTHER SPECIFIED ACCOUNTING PRINCIPLES APPLICABLE TO THE ORGANIZATION. NOTHING IN OUR RECOMMENDATION WOULD PROHIBIT UNLICENSED OR NONCERTIFIED ACCOUNTANTS FROM PROVIDING BOOKKEEPING SERVICES, EXPERT ACCOUNTING SERVICES, OR OTHER SERVICES NOT REQUIRING A FINANCIAL AUDIT LEADING TO AN OPINION ON FINANCIAL STATEMENTS, OR FROM SERVING AS EMPLOYEES OF QUALIFIED PUBLIC ACCOUNTANTS WHO ASSUME RESPONSIBILITY FOR OPINIONS ON FINANCIAL STATEMENTS, IF THE LAWS OF THEIR STATES PERMIT THEM TO DO SO.

THE AUDIT STANDARDS THAT WE ISSUED IN 1972 PROVIDE NOT ONLY FOR FINANCIAL AUDITS BUT ALSO FOR AUDIT WORK ASSESSING WHETHER DESIRED RESULTS ARE ATTAINED UNDER GOVERNMENT PROGRAMS AND WHETHER FUNDS ARE USED EFFICIENTLY AND ECONOMICALLY. THERE IS NO PROFESSION WHICH IS, BY STATUTE, SPECIFICALLY AUTHORIZED TO, OR PRECLUDED FROM, PERFORMING AUDITS OF EFFICIENCY AND ECONOMY OF OPERATIONS OR EVALUATING WHETHER DESIRED RESULTS HAVE BEEN ACHIEVED BY GOVERNMENTAL PROGRAMS. ACCORDINGLY, NONCERTIFIED ACCOUNTANTS AND CPAS ALIKE MAY DO SUCH WORK, IF OTHERWISE QUALIFIED OR CAPABLE.

THEREFORE THERE ARE MANY AREAS OF ACCOUNTING AND AUDITING IN WHICH ACCOUNTANTS MAY RENDER SERVICE TO GOVERNMENTAL CLIENTS. OUR RECOMMENDED POLICY APPLIES TO ONLY ONE AREA - RENDERING OPINIONS ON FINANCIAL STATEMENTS. THESE OPINIONS HAVE SPECIAL IMPORTANCE BECAUSE THIRD PARTIES RELY ON THE PROFESSIONAL OPINIONS IN MAKING INVESTMENTS, SUCH AS PURCHASING MUNICIPAL BONDS, AND FOR OTHER IMPORTANT FINANCIAL DECISIONS. THE PRACTICE OF ESTABLISHING STANDARDS FOR THOSE WHO PERFORM THIS SERVICE IS ANALOGOUS TO WHAT STATES REQUIRE IN OTHER PROFESSIONS, SUCH AS LAW, MEDICINE, AND NURSING. THE ULTIMATE PURPOSE OF SUCH PROFESSIONAL STANDARDS IS TO PROTECT THE INTEREST OF THE PUBLIC WHO USES THOSE SERVICES.

BASES FOR OUR CONCLUSIONS

FEW WILL DISPUTE THAT GOVERNMENTAL FINANCIAL STATEMENTS INCLUDE MANY COMPLEX AND COMPLICATED ACCOUNTING TRANSACTIONS. IT FOLLOWS, THEREFORE, THAT THE HIGHEST TYPE OF SKILLS ARE NEEDED TO AUDIT AND GIVE OPINIONS ON THESE STATEMENTS. TO BE SURE THAT THOSE WHO UNDERTAKE SUCH WORK POSSESS SUCH SKILLS REQUIRES ESTABLISHING CRITERIA TO MEASURE COMPETENCE.

THE CPA UNIFORM EXAMINATION WAS ESTABLISHED FOR THIS PURPOSE. THIS EXAMINATION IS PREPARED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND IS GIVEN SEMIANNUALLY BY EACH OF THE 50 STATES AND THE DISTRICT OF COLUMBIA. STATE LAWS GOVERN WHO SHALL BE QUALIFIED TO TAKE THE EXAMINATION. IT IS GRADED CENTRALLY FOR THE STATES BY THE AMERICAN INSTITUTE.

STATE REQUIREMENTS FOR NONCERTIFIED PUBLIC ACCOUNTANTS DIFFER WIDELY.

- SEVEN STATES AND THE DISTRICT OF COLUMBIA DO NOT IMPOSE ANY REQUIREMENT ON PERSONS PRACTICING PUBLIC ACCOUNTING AND RENDERING OPINIONS ON FINANCIAL STATEMENTS; THEY DO, HOWEVER, RESTRICT THE USE OF THE TITLE "CERTIFIED PUBLIC ACCOUNTANT" TO THOSE WHO HAVE PASSED THE EXAMINATION.

- ELEVEN OTHER STATES LICENSE OR REGISTER PERSONS IN ADDITION TO CPAS, ON A CONTINUING BASIS, TO PRACTICE PUBLIC ACCOUNTING AND RENDER OPINIONS ON FINANCIAL STATEMENTS, IF THEY MEET CERTAIN REQUIREMENTS. THESE REQUIREMENTS DIFFER WIDELY FROM STATE TO STATE, BUT NONE IS AS STRINGENT AS THE REQUIREMENTS FOR BECOMING A CPA. HOWEVER, ONLY CPAS MAY USE THAT TITLE.

- THE REMAINING 32 STATES PERMIT NO ONE TO PRACTICE PUBLIC ACCOUNTING EXCEPT CPAS AND THOSE PUBLIC ACCOUNTANTS WHO WERE IN PRACTICE OR WHO MET OTHER STATED REQUIREMENTS WHEN LEGISLATION LIMITING THE PRACTICE OF PUBLIC ACCOUNTING WAS ADOPTED.

BECAUSE OF THESE DIVERGENT STATE REQUIREMENTS, THE QUESTION IS HOW THE FEDERAL GOVERNMENT CAN ASSURE ITSELF THAT THOSE ENGAGED TO GIVE OPINIONS ON FINANCIAL STATEMENTS POSSESS THE REQUIRED SKILLS. WE BELIEVE THAT, TO THE MAXIMUM EXTENT PRACTICABLE, THE FEDERAL GOVERNMENT SHOULD RELY ON THE STANDARDS AND QUALIFICATIONS ESTABLISHED BY THE INDIVIDUAL STATE GOVERNMENTS. HOWEVER, FOR PUBLIC ACCOUNTANTS OTHER THAN CERTIFIED PUBLIC ACCOUNTANTS, THERE ARE NO UNIFORM REQUIREMENTS AND NO EFFECTIVE REGULATION IN SOME STATES. FOR CPAS THERE IS A UNIFORM EXAMINATION, A MAJOR PORTION OF WHICH IS DESIGNED SPECIFICALLY TO TEST THE CANDIDATES' ABILITY IN PRECISELY THAT AREA OF ACCOUNTING PRACTICE.

EVEN THOUGH OTHER PUBLIC ACCOUNTANTS MAY BE LICENSED OR REGISTERED, THERE IS NO REQUIREMENT FOR A UNIFORM EXAMINATION. AS INDICATED PREVIOUSLY, SEVEN STATES AND THE DISTRICT OF COLUMBIA PERMIT INDIVIDUALS TO PRACTICE WITHOUT ANY REQUIREMENTS. REQUIREMENTS IN THE 11 STATES THAT PROVIDE FOR REGISTRATION AND LICENSING OF OTHER PUBLIC ACCOUNTANTS VARY FROM OHIO, WHICH REQUIRES ONLY THAT A LICENSEE HAVE A BACHELOR'S DEGREE IN ACCOUNTING, TO ARIZONA, WHICH REQUIRES THAT A LICENSEE HAVE A BACHELOR'S DEGREE AND 2 YEARS' EXPERIENCE IN ACCOUNTING AND THAT HE PASS A PORTION OF THE CPA EXAMINATION. IN NO CASE ARE THE REQUIREMENTS AS CHALLENGING AS THOSE REQUIRED FOR THE CERTIFIED PUBLIC ACCOUNTANT, AND IN NO CASE IS THERE AS CLEAR A FOCUS ON THE CANDIDATE'S ABILITY TO RENDER OPINIONS ON FINANCIAL STATEMENTS.

IT IS INTERESTING TO NOTE THAT INDIANA, IOWA, NEW HAMPSHIRE, AND SOUTH CAROLINA, WHICH DID NOT HAVE A CLASS OF LICENSED OR REGISTERED ACCOUNTANTS, HAVE, IN THE LAST 4 YEARS, CREATED ONE FOR ACCOUNTING PRACTITIONERS. HOWEVER, NONE OF THESE STATES PERMIT THESE LICENSED OR REGISTERED ACCOUNTANTS TO RENDER OPINIONS ON FINANCIAL STATEMENTS. FACT, SINCE SEPTEMBER 1970, 11 STATE LEGISLATURES HAVE REJECTED PROPOSALS WHICH WOULD HAVE CREATED A CLASS OF ACCOUNTANTS, IN ADDITION TO CERTIFIED PUBLIC ACCOUNTANTS, WHICH WOULD HAVE AUTHORITY TO RENDER OPINIONS ON FINANCIAL STATEMENTS. CONSEQUENTLY, IT APPEARS THAT MANY STATES HAVE REACHED CONCLUSIONS SIMILAR TO THOSE WE HAVE REACHED ON THIS MATTER.

ABOUT 15,000 PUBLIC ACCOUNTANTS BELONG TO THE NATIONAL SOCIETY OF PUBLIC ACCOUNTANTS. THIS ORGANIZATION HAS AN ACCREDITATION PROGRAM DESIGNED TO ESTABLISH THE COMPETENCE OF ITS MEMBERS. WE HAVE REVIEWED THE EXAMINATION USED IN THAT PROGRAM AND FIND THAT IT IS FAR LESS DEMANDING THAN THE CPA EXAMINATION AND FAR LESS USEFUL AS A TEST OF THE CANDIDATE'S ABILITY TO RENDER PROFESSIONAL OPINIONS ON FINANCIAL STATEMENTS.

AS WE ADVISED SENATORS ERVIN AND METCALF IN OUR LETTERS DATED AUGUST 7, 1974, WE CONSIDERED THE POSSIBILITY OF GAO'S GIVING AN EXAMINATION TO TEST THE COMPETENCE OF ACCOUNTANTS AND AUDITORS TO DO GOVERNMENT AUDITING. HAVE SINCE CONCLUDED THAT THE COST OF SUCH A PROGRAM WOULD BE FAR GREATER THAN ITS BENEFITS. THE ONLY FUNCTION THAT OUR RECOMMENDATION LIMITS TO CERTIFIED PUBLIC ACCOUNTANTS IS AN AUDIT LEADING TO AN OPINION ON FINANCIAL STATEMENTS. THE CPA EXAMINATION IS DESIGNED TO TEST AN APPLICANT'S KNOWLEDGE OF ACCOUNTING THEORY, AUDITING PRINCIPLES, AND BUSINESS LAW, AS WELL AS HIS ABILITY TO APPLY SUCH KNOWLEDGE TO PRACTICAL PROBLEMS - ALL LEADING TO THE EXPERTISE NEEDED TO PERFORM FINANCIAL AUDITS AND RENDER OPINIONS ON FINANCIAL STATEMENTS. IF WE DID GIVE AN EXAMINATION, IT WOULD BE AT LEAST AS DIFFICULT AS THE CPA EXAMINATION. SINCE THAT EXAMINATION IS AVAILABLE, IT WOULD BE DUPLICATIVE TO CREATE A SEPARATE EXAMINATION FOR THE SAME PURPOSE.

A SECOND ISSUE BROUGHT TO OUR ATTENTION WAS THAT THERE WERE NOT ENOUGH CPAS TO DO THE NECESSARY WORK. HOWEVER, OUR INFORMATION SHOWS THAT THERE ARE 107,000 CPAS WHO ARE MEMBERS OF THE AMERICAN INSTITUTE. THIS IS AN INCREASE OF 32,000 SINCE 1970. THERE ARE PERHAPS 45,000 ADDITIONAL CPAS WHO ARE NOT MEMBERS OF THE INSTITUTE. (RECORDS ARE NOT READILY AVAILABLE ON THIS, SO THE FIGURE IS ESTIMATED.) INSTITUTE RECORDS SHOW THAT ITS MEMBERS ARE WIDELY DISPERSED THROUGHOUT THE UNITED STATES, EVEN IN SPARSELY SETTLED STATES. FOR EXAMPLE, THERE ARE 222 PRACTICING CPAS IN MONTANA, 235 IN IDAHO, AND 83 IN SOUTH DAKOTA. MOREOVER, CPAS ARE ACCUSTOMED TO TRAVELING TO DO WORK FOR CLIENTS. ACCORDINGLY, WE BELIEVE THAT ANY GOVERNMENTAL UNIT THAT WISHES TO ENGAGE A CERTIFIED PUBLIC ACCOUNTANT TO GIVE AN OPINION ON ITS FINANCIAL STATEMENTS WILL BE ABLE TO FIND ONE WITHOUT DIFFICULTY.

WHEN WE ISSUED OUR RECOMMENDED POLICY STATEMENT IN 1970, WE PROVIDED A 5- YEAR GRACE PERIOD SO THAT THOSE NONCERTIFIED ACCOUNTANTS WHO WISHED TO DO GOVERNMENT WORK REQUIRING OPINIONS ON FINANCIAL STATEMENTS COULD HAVE AN OPPORTUNITY TO PASS THE CPA EXAMINATION. THE NATIONAL SOCIETY OF PUBLIC ACCOUNTANTS ADVISED US, HOWEVER, THAT MANY OF ITS MEMBERS COULD NOT QUALIFY FOR THE EXAMINATION BECAUSE THEY COULD NOT MEET THE EXPERIENCE OR EDUCATION REQUIREMENTS OF THE STATES IN WHICH THEY RESIDED OR PRACTICED.

WE HAVE LOOKED INTO THIS AND FOUND THAT THE EDUCATION AND EXPERIENCE REQUIREMENTS FOR TAKING THE CPA EXAMINATION AND FOR OBTAINING A LICENSE TO PRACTICE AS A CPA VARY GREATLY FROM STATE TO STATE. IN MANY STATES THERE ARE PROVISIONS FOR PARTIALLY SUBSTITUTING EXPERIENCE FOR EDUCATIONAL REQUIREMENTS AND VICE VERSA. IN OTHERS THERE ARE PROVISIONS THAT THE STATE ACCOUNTANCY BOARD CAN WAIVE SOME OR ALL OF THE EDUCATIONAL REQUIREMENTS ON THE BASIS OF A SPECIAL TEST OR OTHER DEMONSTRATION OF CAPABILITY WHICH MEETS THE BOARD'S STANDARDS. FOR EXAMPLE, IN ARKANSAS A CANDIDATE MAY SIT FOR THE CPA EXAMINATION IF HE HAS A COLLEGE DEGREE IN ACCOUNTING OR ITS EQUIVALENT. HOWEVER, THE BOARD MAY WAIVE THIS EDUCATIONAL REQUIREMENT IF THE CANDIDATE PASSES A SPECIAL WRITTEN EXAMINATION. TO OBTAIN A LICENSE TO PRACTICE AS A CPA AFTER PASSING THE EXAMINATION, THE CANDIDATE MUST HAVE HAD 2 YEARS' EXPERIENCE IN PUBLIC ACCOUNTING OR SIMILAR WORK; HOWEVER, IF HE HAS A MASTER'S DEGREE, ONLY 1 YEAR'S EXPERIENCE IS REQUIRED.

A CANDIDATE WHO IS A HIGH SCHOOL GRADUATE WITH 3 YEARS' PUBLIC ACCOUNTING EXPERIENCE MAY SIT FOR THE CPA EXAMINATION IN OKLAHOMA. IF THE CANDIDATE HAS A COLLEGE DEGREE IN ACCOUNTING OR THE EQUIVALENT HE NEEDS NO EXPERIENCE TO SIT FOR THE EXAMINATION. ONCE THE CANDIDATE PASSES THE EXAMINATION, HE RECEIVES A CPA LICENSE. THERE ARE NO FURTHER EDUCATIONAL OR EXPERIENCE REQUIREMENTS.

IN ITS RECENTLY RECOMMENDED "MODEL ACCOUNTANCY BILL," THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PROVIDES FOR AN EDUCATIONAL REQUIREMENT OF A COLLEGE DEGREE FOR THE FIRST 5 YEARS OF THE ACT AND FOR AN ADDITIONAL 30 SEMESTER HOURS OF STUDY THEREAFTER. HOWEVER, THE PROPOSED ACT ALSO PROVIDES THAT THE BOARD MAY WAIVE THE EDUCATIONAL REQUIREMENT ON THE BASIS OF THE RESULT OF A SPECIAL WRITTEN EXAMINATION TO ASCERTAIN THAT THE CANDIDATE IS EDUCATIONALLY WELL EQUIPPED.

FOR THOSE WHO MEET THE ABOVE EDUCATIONAL REQUIREMENT, THE INSTITUTE'S MODEL ACT RECOMMENDS THAT NO QUALIFYING EXPERIENCE BE REQUIRED. FORTY-TWO STATES NOW HAVE PROVISIONS WHICH ALLOW CANDIDATES WITHOUT ANY EXPERIENCE TO SIT FOR THE EXAMINATION, IF THEY MEET SPECIFIC EDUCATIONAL REQUIREMENTS.

THE AMERICAN INSTITUTE DEVELOPED THE MODEL ACCOUNTANCY BILL FOR USE IN A NEW STATE LEGISLATIVE PROGRAM WHICH, WE WERE INFORMED, IS BEING ACTIVELY PURSUED BY THE INSTITUTE AND STATE CPA ORGANIZATIONS.

IN VIEW OF THE ABOVE, WE BELIEVE THAT IN MOST STATES AN ACCOUNTANT WHO HAS SUFFICIENT KNOWLEDGE AND TRAINING WILL BE ABLE TO SIT FOR THE CPA EXAMINATION AND, IF HE PASSES, BE LICENSED AS A CERTIFIED PUBLIC ACCOUNTANT. IN ADDITION, AS CASES ARE BROUGHT TO ITS ATTENTION WHEN CANDIDATES ARE UNABLE TO SIT FOR THE CPA EXAMINATION OR TO BE LICENSED AS CPAS AFTER PASSING THE EXAMINATION, THE INSTITUTE REPLIES TO THE CANDIDATES CITING ITS POSITION ON EDUCATIONAL AND EXPERIENCE REQUIREMENTS AND SENDS COPIES OF THE RESPONSES TO THE RESPECTIVE STATE BOARDS. THE INSTITUTE HAS INFORMED US THAT IT WILL CONTINUE TO ASSIST THE INDIVIDUAL CANDIDATES AS MUCH AS POSSIBLE.

CONCLUSION

WE BELIEVE IT IS IN THE GOVERNMENT'S INTEREST THAT OUR RECOMMENDATION REMAIN UNCHANGED. WE BELIEVE ALSO THAT, WHEN THE GOVERNMENT ENGAGES PUBLIC ACCOUNTANTS, IT NEEDS THE BEST QUALIFIED ONES IT CAN GET. IT IS CLEARLY FAR LESS COSTLY TO THE FEDERAL GOVERNMENT TO RELY ON THE STATE- SPONSORED CPA EXAMINATION AS A MEANS OF TESTING COMPETENCE TO GIVE OPINIONS ON FINANCIAL STATEMENTS THAN IT WOULD BE FOR US OR FOR ANY OTHER FEDERAL AGENCY TO ADMINISTER A SEPARATE TEST. NO OTHER EXISTING TEST SEEMS AS WELL SUITED TO THIS PURPOSE AS THE CPA EXAMINATION.

PUBLIC ACCOUNTANTS WHO DO NOT MEET THE QUALIFICATIONS WE RECOMMEND MAY DO MANY OTHER TYPES OF GOVERNMENTAL ACCOUNTING WORK, INCLUDING, BUT NOT LIMITED TO, AUDITS OF EFFICIENCY AND ECONOMY OF OPERATIONS, AUDITS OF EFFECTIVENESS, AND ACCOUNTING SYSTEMS DESIGN WORK.

WE SHALL BE PLEASED TO DISCUSS THIS MATTER WITH YOU OR YOUR STAFF IF YOU DESIRE.