VSCPA Comments on HUD Proposal
March 26, 2008 A proposed rule (.PDF) from the U.S. Department of Housing and Urban Development (HUD) to establish an Independent Public Accountant (IPA) Roster raises serious concerns, the VSCPA stated in official comments on March 26, 2008.
The rule would require CPA firms to meet certain eligibility requirements and register with HUD to perform HUD audits (e.g. public housing agencies, nonprofit and for-profit housing projects, certain lenders).
The VSCPA opposes the rule as proposed because it could unintentionally set a dangerous, unnecessary and costly precedent that other federal granting agencies may want to replicate — a precedent that is not in the public’s best interests.
Specific VSCPA concerns include:
- Eligibility requirements: Requirements for IPAs to be added to the roster are overly broad. To stay on the roster, IPAs must agree to comply with any requests for information made by HUD and all applicable HUD rules and instructions.
- Removal procedures: Due process is limited. IPAs facing removal from the roster are not afforded a fair hearing under certain circumstances. In addition, IPAs removed from the roster would have no appeal rights.
- Reputation damage: Removal from the roster could be viewed as debarment by a federal agency, resulting in CPA license revocation in certain states and causing irreparable damage to IPAs’ reputations.
- Reduction of auditor pool: IPAs would not be able to perform HUD audits if a partner or employee who does not participate in HUD audits has been barred by the Securities and Exchange Commission. This would reduce the pool of qualified HUD auditors.
- Administrative burden: The proposal estimates only one hour of administrative burden time per registrant, inadequately calculating the financial resources needed to disclose or provide information to HUD.
Ultimately, the proposal could have a serious impact on the total pool of HUD auditors, as many IPAs may decide the above issues outweigh the benefits to providing HUD audits, and abandon their HUD audit practices altogether.
The VSCPA supports HUD’s goal to ensure the quality of HUD audits, but believes there are other means to accomplishing this goal. For example, HUD could provide training programs to better educate IPAs on how HUD interprets the standards under which these audits are performed. Also, HUD should continue to rely on the robust enforcement programs already in place among state boards of accountancy and the ethics and peer review programs of the American Institute of CPAs and state societies.
For more information, read the VSCPA’s full comments. For questions or concerns, contact VSCPA Technical Services Manager Emily Walker at (800) 422-6707.
|
Comments