Texas Lawmaker Aims to End Some Peer Reviews

A Texas lawmaker wants small CPA firms that prepare financial statements for small businesses to be exempted from the state’s mandatory peer review program, and ensure at least two sole practitioners are represented on the Texas State Board of Accountancy.

Phil Stephenson, a state representative who is also a CPA, told Accounting Today that the state over-regulates small CPA practices. One bill would remove compilation reports for small businesses from the state’s mandatory inspection program. Small businesses are defined as those with fewer than 100 employees and under $6 million in revenue.

Texas Association of CPAs president John Furge supports Stephenson’s bill. He said, “The risk of an accounting failure is insignificant. Even if there were to be an accounting failure, the consequences would affect very few people. The burden of inspection is simply not justified.”

Stephenson’s office told AT that AICPA peer review program was not intended to be uniformly applied to all CPAs who prepare financial reports. CPA firms that prepare only compilation reports, for example, may join the AICPA without being subject to mandatory inspection. The Texas State Board of Accountancy, however, interprets the AICPA program as being mandatory for any Texas CPA who performs any attest work, regardless of the size of the entity.

Another bill would ensure that at least two sole practitioner CPAs be appointed to the Texas State Board of Public Accountancy.