How might the AICPA regain some of the power it has lost over the years? Are there any disadvantages to these proposals?
What will be an ideal response?
ANSWER:
The AICPA might regain some power by becoming the standard-setting body for smaller firms – referred to as baby GAAP. There has been some question whether this differentiation should be small firms versus large firms or public versus privately owned firms. The FASB has joined with the AICPA in proposing that the AICPA participate in a separate standards-setting process for private companies. Disadvantages of this proposal are that this would add complexity to the standards-setting process, and make the AICPA the representative of the privately owned firms.
Another important role for the AICPA is to curb opinion shopping, where clients try to find an auditing firm who will either “lowball” its bid to secure a client or will go along with a questionable accounting method that the client desires to employ. The AICPA had been attempting to strengthen professional standards and rules of performance and behavior.
Also, the AICPA has formed the AICPA Special Committee on Financial Reporting, which was given the charge of recommending what additional information management should provide for users and the extent to which auditors should report on the information.
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