The American Institute of Certified Public Accountants (AICPA) is working on a CPA firm validation initiative, which would effectively mean the creation of a clearing house for audited financial statements.
The professional body is aiming at setting up the clearing house in 2016, AICPA vice-president, firm services & global alliances Mark Koziel said in a wide-ranging interview with The Accountant for this publication’s US survey 2015.
The clearing house will be managed by CPA.com, a commercial arm of AICPA, and is currently in a pilot sate being tested by a number of accounting firms and banks.
The goal of this initiative is to create greater reassurances in the market place verifying, through the use of technology, the authenticity of financial statements audited by accountancy firms, Koziel explained.
"[It involves] a verification process to assure that financial statements came from a real CPA firm, licensed to practice in a particular state, which has actually attested those financial statements," Koziel added.
The clearing house would be particularly helpful in bank confirmation processes, Koziel continued, to authenticate that the audit report of clients requesting a loan comes from a reliable source.
AnalysisIf successful, the CPA firm validation initiative might have a positive impact on the financial reporting culture and practices of SMEs, which tend to produce financial statements with the taxman in mind, rather than taking into account the needs of investors and providers of capital.
In the US, as in other jurisdictions, the tax returns of SMEs are said to be preferred over financial statements as main proof of financial health in banking transactions to access credit.
Apart from speeding up bank confirmations, a clearing house of audited financial statements might reinvigorate assurance practices and a more ambitious financial reporting among SMEs, which are thought to be the backbone of the economy in every country.
Related storyNon-audit services monitor: United States