AICPA Backs Bill to Narrow Definition of ‘Municipal Advisor’
The American Institute of CPAs yesterday sent a letter to members of the House Committee on Financial Services supporting a bill that would narrow the definition of “municipal advisor,” without weakening protection for investors.
The Financial Services Committee is expected to mark up the bill, H.R. 2827, on Sept. 12.
“Overall, we believe Section 975 of the Dodd-Frank Act is important for strengthening investor protections in the municipal securities market, but we believe that a narrower definition of a municipal advisor is also needed,” wrote AICPA President and CEO Barry Melancon. “This bill would do that without weakening the investor protections afforded by Dodd-Frank.”
Section 975 of the Dodd-Frank Act amended Section 15B of the Securities Exchange Act of 1934 to, among other things, make it unlawful for municipal advisors to provide certain advice to, or solicit, municipal entities or certain other persons without registering with the SEC.
However, the AICPA does not believe accountants who are providing “customary and usual services” should be included in the definition.
In his letter Melancon said, “We specifically support the definition of a municipal advisor that does not include an accountant who is ‘providing customary and usual services, including any attestation or audit service or issuing letters for underwriters for a municipal entity or providing advice that is related to or in connection with any such activities and not for separate compensation.’”
He noted that accountants providing “customary and usual services” are subject to the AICPA’s Professional Standards and to the regulatory authority of a state board of accountancy or a federal authority (e.g., the IRS for providing federal tax advice). Thus, these CPAs are subject to layers of regulation that adequately and appropriately protect investors. Additional regulation by the SEC is not necessary.