61H1-20.003: Client
61H1-20.004: Enterprise
61H1-20.0051: Assembled Financial Statements
61H1-20.0052: Offer to Perform or Perform Services Involving Assembled Financial Statements
61H1-20.0053: Standards for Assembled Financial Statements
61H1-20.007: Generally Accepted Accounting Principles
61H1-20.008: Generally Accepted Auditing Standards
61H1-20.009: Standards for Accounting and Review Services
61H1-20.0092: Government Auditing Standards
61H1-20.0093: Rules of the Auditor General
61H1-20.0095: Standards for Consulting Services
61H1-20.0096: Services for Tax Practice
61H1-20.0097: Standards for Personal Financial Planning
61H1-20.0099: Standards for Attestation Engagements
61H1-20.010: Engagement
61H1-20.013: Employee
61H1-20.016: Non-CPA Shareholders, Partners, and Members
PURPOSE AND EFFECT: The Board proposes the rule amendment in order to clarify the definitions of client and enterprise; to provide the correct citation for “assembled financial statements;” to update language concerning the certified public accountant; to clarify and edit punctuation errors; to update generally accepted accounting principles from the GASB to the FASB; to update the auditing standards; to provide a website by which to obtain the Standards for Accounting and Review Services; to provide a website by which to obtain the Government Auditing Standards; to update the effective dates and rules of the Auditor General; to update the standards for consulting services; to update the standards for tax practice by providing the updated standards; to provide the updated standards for personal financial planning and to provide the updated standards for attestation engagements.
SUBJECT AREA TO BE ADDRESSED: Client; Enterprise; Assembled Financial Statements; Offer to Perform or Perform Services Involving Assembled Financial Statements; Standards for Assembled Financial Statements; Generally Accepted Accounting Principles; Generally Accepted Auditing Standards; Standards for Accounting and Review Services; Government Auditing Standards; Rules of the Auditor General; Standards for Consulting Services; Services for Tax Practice; Standards for Personal Financial Planning; Standards for Attestation Engagements; Engagement; Employee; Non-CPA Shareholders, Partners and Members.
SPECIFIC AUTHORITY: 455.203(8), 473.304, 473.314, 473.315, 473.317, 473.323 FS., Ch. 81-302, § 27, §1, Ch. 97-35, Laws of Florida.
LAW IMPLEMENTED: 455.203(8), 473.302, 473.304, 473.309(1)(b), 473.314, 473.315, 473.317, 473.318, 473.319, 473.322, 473.3101 FS., Ch. 81-302, § 27, §1, 12, Ch. 98-340, §1, Ch. 97-35, Laws of Florida.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE NOTICED IN THE NEXT AVAILABLE FLORIDA ADMINISTRATIVE WEEKLY.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Veloria Kelly, Division Director, Board of Accountancy, 240 N.W. 76th Dr., Suite A, Gainesville, Florida 32607
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
61H1-20.003 Client.
“Client” shall be deemed and construed to mean the person(s) or entity which retains a certified public accountant or firm licensee for the performance of public accounting services.
Rulemaking Specific Authority 473.304, 473.323 FS. Law Implemented 473.317, 473.318, 473.319 FS. History–New 12-4-79, Formerly 21A-20.03, 21A-20.003, Amended________.
61H1-20.004 Enterprise.
“Enterprise” shall be deemed and construed to mean any person(s) or entity, whether organized for profit or not, for which a certified public accountant or firm licensee provides public accounting services.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 12-4-79, Formerly 21A-20.04, 21A-20.004, Amended________.
61H1-20.0051 Assembled Financial Statements.
(1) No change.
(2) The term “assembled financial statements” refers to any financial statements included in Section 473.302(8)(7)(c), F.S.
(3) No change.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented ss. 1, 12, Ch. 98-340, Laws of Florida. History–New 10-28-98, Amended________.
61H1-20.0052 Offer to Perform or Perform Services Involving Assembled Financial Statements.
The term “offer to perform or perform services involving assembled financial statements” as used in Rule 61H1-20.0053, F.A.C., applies to an actively licensed cCertified pPublic aAccountant who performs one or more types of services involving the preparation of assembled financial statements including:
(1) through (3) No change.
(4) Being the only certified public accountant licensee involved with providing services involved in the preparation of financial statements.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented ss. 1, 12, Ch. 98-340, Laws of Florida. History–New 10-28-98, Amended_________.
61H1-20.0053 Standards for Assembled Financial Statements.
A cCertified pPublic aAccountant holding an active license may offer to perform or perform services involving assembled financial statements so long as the cCertified pPublic aAccountant complies with the standards for assembled financial statements, which are as follows:
(1) Understanding with the Entity – The cCertified pPublic aAccountant shall establish a written understanding with the entity regarding the services to be performed. This written understanding shall include a description of the nature and limitations of the services to be performed. The understanding shall also provide:
(a) That the engagement cannot be relied upon to disclose errors, fraud, or illegal acts; and
(b) Disclose whether or not the entity preparing the financial statement is or is not licensed by the Florida Board of Accountancy. An example engagement letter is provided for illustrative purposes:
(Appropriate Salutation)
This letter is to confirm our understanding of the terms and objectives of our engagement to provide accounting services during (date), the output of which will be in the form of (monthly/quarterly/other frequency) assembled financial statements.
• We will perform the following services (selected illustrations):
• Assist you in recording transactions on a (monthly/quarterly/other frequency) basis.
• Prepare a trial balance from your accounts and journals.
• Assemble that information in the form of financial statements.
• Provide comments of a business advisory nature.
We do not undertake to, and will not, provide any opinion or form of assurance on the financial statements we assemble in connection with these services and, accordingly, we do not undertake to make inquiries or perform other procedures to verify, corroborate, or review information supplied by you. In addition, those statements may (will) contain departures from generally accepted accounting principles or another comprehensive basis of accounting.
Our engagement to assemble financial statements cannot be relied upon to disclose errors, fraud, or illegal acts, including fraud or defalcations that may exist. These assembled financial statements are prepared by an entity that is (is not) licensed by the Florida Board of Accountancy.
Our fees for these services. . . .
We shall be pleased to discuss this letter with you at any time.
If the foregoing is in accordance with your understanding, please sign the copy of this letter in the space provided and return it to us.
Sincerely yours,
_______________________________
(Signature of Ccertified Ppublic Aaccountant)
Accepted and agreed to:
XYZ Company
__________________________
President
__________________________
Date
(2) Any cCertified pPublic aAccountant who offers to perform or performs assembled financial statements must comply with the provisions of Rule 61H1-22.001, F.A.C.
(3) Language or style similar to that used in reports as defined in Rule 61H1-20.009, F.A.C., shall be avoided to reduce any possible risk of misunderstanding.
(4) Assembled financial statements are not prepared with an expression of any form of opinion or assurance.
(5) Assembled financial statements shall be accompanied by a transmittal letter. See example standard transmittal letter following (12) below.
(6) Before issuing the transmittal letter, the cCertified pPublic aAccountant shall read the assembled financial statements and consider whether such financial statements appear to be free from obvious material errors. In this context, the term error refers to mistakes in the assembly of financial statements, including arithmetical or clerical mistakes.
(7) The date of completion of the assembled financial statement(s) shall be used as the date of the transmittal letter.
(8) The transmittal letter shall include the name and license number of the cCertified pPublic aAccountant who offers to perform or performs services involving assembled financial statements. If more than one cCertified pPublic aAccountant offers to perform or performs such services, then the name and license number of the cCertified pPublic aAccountant who assumes responsibility for the statements shall be included. If a Licensed Audit Firm or Public Accounting Firm offers to perform or performs such services, the name and license number of the firm may be utilized instead of the name and license number of an individual cCertified pPublic aAccountant.
(9) The following language shall be included in the transmittal letter and on each page of the assembled financial statements: These assembled financial statements are not prepared with an expression of any form of opinion or assurance and they are prepared by an entity that is (is not) licensed by the Florida Board of Accountancy.
(10) If the Licensed Audit Firm, cCertified pPublic aAccountant or the cCertified pPublic aAccountant employer’s is not independent, as defined in Rule 61H1-20.001, F.A.C., the transmittal letter shall disclose the lack of independence.
(11) Transmittal letters may include comments of a business advisory nature to which the cCertified pPublic aAccountant wishes to draw the client's attention.
(12) An example standard transmittal letter is provided for illustrative purposes:
(Date)
These assembled financial statements for XYZ Company as of (date) are prepared without an expression of any form of opinion or assurance and they are prepared by an entity that is (is not) licensed by the Florida Board of Accountancy.
(Comments of a business advisory nature may be included in a separate paragraph(s).
_______________________________
(Signature of Licensed Audit Firm), or
_______________________
(Signature of Active Certified Public Accountant) Licensee
________________________________
(State of Issuance and License Number)
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.302, 473.322 FS. History–New 10-28-98, Amended 9-20-00, 8-28-06,________.
61H1-20.007 Generally Accepted Accounting Principles.
Non-governmental generally accepted accounting principles in the United States of America shall be deemed and construed to mean the principles and standards as promulgated by the Financial Accounting Standards Board (FASB) Accounting Standards CodificationTM, published on July 1, 2009 and effective for interim and annual periods ending after September 15, 2009. The FASB Accounting Standards Codification TM, is available from FASB at 401 Merritt 7, P.O. Box 5116, Norwalk, CT 06856-5116, telephone (203)847-0700 or at its website at http://asc.fasb.org/.
Governmental generally accepted accounting principles in the United States of America shall be deemed and construed to mean the principles and standards as promulgated by the Governmental Accounting Standards Board (GASB) Summary of Statement No. 55.
The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments (Issued 03/09) and available from GASB at 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06850-5116, telephone: (203)847-0700 or at its website at http://www.gasb.org/, for state and local governments or the principles and standards as promulgated by the Federal Accounting Standards Advisory Board (FASAB), available from FASAB, 750 First Street, Suite 1001, Washington, D.C. 20002, telephone (202)512-7350 or at its website at http://www.fasab.gov/index.html for federal governmental entities.
“Generally Accepted Accounting Principles” shall be deemed and construed to mean accounting principles generally accepted in the United States of America in effect as of June 30, 2002, including, but not limited to, Accounting Principles Board Opinions Nos. 1 to 31 as published by the American Institute of Certified Public Accountants, and statements of accounting standards and interpretations thereof, as published by the Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB) and the Federal Accounting Standards Advisory Board (FASAB). The FASB materials are entitled Original Pronouncements 2001/2002 Edition, vols. I, II, & III, dated 12/31/00, and available from FASB, 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06856-5116, 1(888)777-7077, http://www.cpa2biz.com. The GASB materials are entitled Governmental Accounting and Financial Reporting Standards, (Statement 34 Edition), available from GASB, 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06850-5116. The FASAB materials are entitled FASAB Statements 1-22, dated 12/31/00, and are available from FASAB, 750 First Street, Suite 1001, Washington, D.C. 20002, (202)512-7350.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 12-4-79, Amended 2-3-81, 3-16-81, 1-25-82, 7-6-82, 12-9-82, 7-27-83, 3-22-84, 7-2-85, Formerly 21A-20.07, Amended 9-23-86, 5-22-88, 4-8-90, 4-21-91, Formerly 21A-20.007, Amended 10-19-94, 9-30-97, 9-29-02,_________.
61H1-20.008 Generally Accepted Auditing Standards.
Non-issuer ((non-issuers are (1) all entities who are not issuers as that term is defined by the Sarbanes-Oxley Act of 2002, and (2) entities whose audits are not required by Securities & Exchange Commission (SEC) rules to be conducted in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB))“ gGenerally aAccepted aAuditing sStandards” shall be deemed and construed to mean auditing standards generally accepted in the United States of America in effect as of June 30, 20092, including, but not limited to, general, field work and reporting standards approved and adopted by the membership of the American Institute of Certified Public Accountants (AICPA), as amended by the AICPA Auditing Standard Board (ASB) and standards promulgated by the ASB in the form of Statements on Auditing Standards (entitled Codification of Statements on Auditing Standards, (including Statements on Standards for Attestation Engagements) Numbers 1 to 93, dated 2001, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request at call 1(888)777-7077).
Issuer (issuer means an issuer (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)), the securities of which are registered under section 12 of that Act (15 U.S.C. 78l), or that is required to file reports under section 15(d) (15 U.S.C. 78o(d)), or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933 (15 U.S.C. 77a et seq.), and that it has not withdrawn), generally accepted auditing standards shall be deemed and construed to mean auditing and attest standards generally accepted in the United States of America in effect as of July 1, 2009 as published by the PCAOB and available at its website at www.pcaob.org.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 12-4-79, Amended 3-16-81, 7-6-82, 12-9-82, 7-27-83, 3-22-84, 7-2-85, Formerly 21A-20.08, Amended 9-23-86, 5-22-88, 4-8-90, 4-21-91, Formerly 21A-20.008, Amended 10-19-94, 9-30-97, 9-29-02,_________.
61H1-20.009 Standards for Accounting and Review Services.
“Standards for Accounting and Review Services” shall be deemed and construed to mean Statements on Standards for Accounting and Review Services published by the American Institute of Certified Public Accountants in effect as of June 30, 2008, 2002. (Entitled Codification of Statements on Standards for Accounting and Review Services, Numbers 1-8, dated 1/1/02, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request at call 1(888)777-7077).
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 12-4-79, Amended 3-16-81, 1-25-82, 7-6-82, 12-9-82, 7-27-83, 3-22-84, 7-2-85, Formerly 21A-20.09, Amended 9-23-86, 5-22-88, 4-8-90, 4-21-91, Formerly 21A-20.009, Amended 10-19-94, 9-30-97, 9-29-02,_________.
61H1-20.0092 Government Auditing Standards.
“Government Auditing Standards” shall be deemed and construed to mean Government Audit Standards issued by the Comptroller General of the United States, in effect as of July 2007 June 30, 2002. (Entitled Government Auditing Standards, July 2007 Revision (GAO-07-731G)) 1994 Revision, and its Amendments entitled Government Auditing Standards Amendment No. 1, Documentation Requirements When Assessing Control Risk at Maximum for Controls Significantly Dependent Upon Computerized Information Systems, GAO/A-GAGAS-1, revised May 1999, and Amendment No. 2, Auditor Communication, GAO/A-GAGAS-2, revised July 1999, available from the United States General Accounting Office, Washington, D.C. 20548-0001) or from its website at http://www.gao.gov/govaud/ybk01.htm.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.304, 473.315 FS. History–New 10-28-86, Amended 5-22-88, 4-8-90, 4-21-91, Formerly 21A-20.0092, Amended 10-19-94, 9-30-97, 9-29-02,_________.
61H1-20.0093 Rules of the Auditor General.
“Rules of the Auditor General” shall be deemed and construed to mean the following Rules of the Auditor General of the State of Florida (effective 9-30-01), in effect as follows of June 30, 2002:
|
Chapter |
Title |
|
10.550 |
Local Government Entity Audits, effective 9/30/2007 |
|
10.650 |
State Single Audits Non-profit and For-profit Organizations, effective 9/30/2007 |
|
10.700 |
Audits of Certain Nonprofit Organizations, effective 6/30/2008 |
|
10.800 |
District School Board Audits, effective 6/30/2008 |
|
10.850 |
Charter School Audits, effective 6/30/2008 |
These rules are available from the State of Florida, Auditor General’s Office or from the website http://www.state.fl.us/audgen, under the Rules and Guidelines section.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 10-22-86, Amended 5-22-88, 4-8-90, 4-21-91, Formerly 21A-20.0093, Amended 9-30-97, 9-29-02,_________.
61H1-20.0095 Standards for Consulting Services.
“Standards for Consulting Services” shall be deemed and construed to mean the Statement on Standards for Consulting Services No. 1, as Statements on Standards for Consulting Services, aka CS Section 100, Consulting Services: Definitions and Standards from the AICPA Professional Standards published by the AICPA American Institute of Certified Public Accountants, in effect as of June 30, 2002, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request at call 1(888)777-7077.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 5-20-91, Formerly 21A-20.0095, Amended 9-30-97, 9-29-02,_________.
61H1-20.0096 Services for Tax Practice.
“Standards for Tax Services” shall be deemed and construed to mean Statements on Standards for Tax Services, dated August 2000, as published by the American Institute of Certified Public Accountants, and in effect as of December 31, 2003, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request at 1(888)777-7077) June 30, 2002.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 5-20-91, Formerly 21A-20.0096, Amended 9-30-97, 9-29-02,_________.
61H1-20.0097 Standards for Personal Financial Planning.
“Standards for Personal Financial Planning” shall be deemed and construed to mean Basic Personal Financial Planning Engagement Functions and Responsibilities First Issued October 1992; Revised January 1996, aka Statements on Responsibilities in Personal Financial Planning Practice, as published by the American Institute of Certified Public Accountants, in effect as of June 30, 2002, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request call at 1(888)777-7077.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 11-8-95, Amended 9-30-97, 9-29-02,_________.
61H1-20.0099 Standards for Attestation Engagements.
“Standards for Attestation Engagements” shall be deemed and construed to mean Statements on Standards for Attestation Engagements published by the American Institute of Certified Public Accountants, (entitled Codification of Statements on Standards for Attestation Engagements, Numbers 1 to 14 11, dated December 2006 January 1, 2002, available from the AICPA’s Resource Online at www.cpa2biz.com or by telephonic request at call 1(888)777-7077), in effect as of June 30, 2002.
Rulemaking Specific Authority 473.304, 473.315 FS. Law Implemented 473.315 FS. History–New 9-29-96, Amended 6-22-98, 9-29-02,_________.
61H1-20.010 Engagement.
“Engagement” shall be deemed and construed to mean the association between a client and a certified public accountant or firm licensee relative to the performance of public accounting services by the certified public accountant or firm licensee for the client.
Rulemaking Specific Authority 473.304, 473.314, 473.315, 473.317 FS. Law Implemented 473.314, 473.315, 473.317 FS. History–New 12-4-79, Formerly 21A-20.10, 21A-20.010, Amended_________.
61H1-20.013 Employee.
A certified public accountant licensee would be considered an employee of a CPA firm for purposes of Chapter 473 if the certified public accountant licensee has the status of an employee under the usual common law rules applicable in determining the employer-employee relationship. A certified public accountant licensee may be leased licensed to a CPA firm through an employee leasing company as defined in Section 443.036(16), F.S., as long as the CPA firm has the power to hire and fire, has complete supervision and control over the certified public accountant’s licensee’s work product, and accepts the certified public accountant licensee as its responsibility for purposes of complying with Rule 61H1-26.002, F.A.C.
Rulemaking Specific Authority 473.304, FS. Law Implemented 473.302, 473.309(1)(b), 473.3101 FS. History–New 10-17-90, Formerly 21A-20.013, Amended_________.
61H1-20.016 Non-CPA Shareholders, Partners and Members.
(1) For purposes of Chapter 473, F.S., and these rules, the terms non-CPA shareholders, partners, and members shall be deemed and construed to mean natural persons materially participating in the business conducted by the firm and when their participation ceases, their interest shall revert to the firm.
(2) Non-CPA shareholders, partners, and members shall not hold themselves out as cCertified pPublic aAccountants or Public Accountants.
Rulemaking Specific Authority 473.304 FS., s. 1, Chapter 97-35, Laws of Florida. Law Implemented s. 1, Chapter 97-35, Laws of Florida. History–New 2-5-98, Amended_________.