CPAs Provided Information, Resources on Financial Crisis and Rescue Plan

These past several weeks have seen unprecedented economic developments on a worldwide scale. The housing bubble burst, markets plunged, credit markets froze, and Congress rushed to pass what is now known as the Emergency Economic Stabilization Act of 2008.

During these times of crisis and uncertainty, CPAs have been doing their part to contribute to stabilizing the economy and reassuring clients, employers, investors, and the general consumer market through a host of different activities. The AICPA likewise has worked to inform members about key developments and to help position the profession to fulfill its public service obligations, namely, to inform the public and investors about the current economic situation so Americans can gain a greater understanding of the issues involved.

Many different ideas were circulating about how to fix this economic crisis, including whether the federal government should be involved at all. In the end, the vast majority of us, as both CPAs and citizens of this great country, believed decisive action was necessary to restore liquidity to the market, increase economic growth and create jobs.

In their role as trusted experts, CPAs are stepping up to help their employers and clients with business and personal financial planning strategies as they unravel the impact and navigate challenges they face. The AICPA has been providing CPAs with information, resources and tools to assist with these efforts and has been involving the state societies throughout the process. Here are some of the AICPA’s activities surrounding the current economic environment:

• Two special issues of AICPA News Update were released. One explained that the Institute urged Congress to come together to help solve the nation’s credit crunch and its fallout. Another recognized the disparate points of view among CPAs regarding fair value accounting and pointed to an FAQ the AICPA developed on the subject.

• The Governmental Audit Quality Center issued an alert regarding the news that a short-term bond fund in which nearly 1,000 colleges and universities nationwide had invested was being terminated and that use of their funds was restricted as a result.

Subsequently, a non-authoritative Technical Practice Aid was issued on the potential accounting and auditing implications when a fund or its trustee restricts non-governmental entities’ balance withdrawals from money market funds or short-term investment vehicles.

• The personal financial planning community provided guidance, hosting a free Webinar on how to advise and communicate with clients during these difficult financial times. The October 8 Webinar has been archived.

• A video Webcast on keeping your business or firm competitive, and even growing your business in a weakened economy, was produced and held on October 8.

• Media coverage of the credit crunch, proposed financial rescue measures and discussion of fair value accounting were included in the AICPA’s daily e-newsletter, CPA Letter Daily.

• The Center for Audit Quality, an AICPA affiliate that serves investors, public company auditors and the markets, sent a letter to Congress urging it to reject calls for mark-to-market accounting rule suspension. The CAQ said the current accounting rules are rooted in the fundamental virtue of transparency and are central to informed market decisions.

Consistent with this thinking, Federal Reserve Chairman Ben Bernanke has supported mark-to-market accounting saying different accounting would erode investor confidence. Additionally, the CAQ also joined with the Council of Institutional Investors and the CFA Institute in issuing a statement, which received media coverage, on its position.

Events are unfolding, and changing, rapidly and CPAs are encouraged to stay informed through future HSCPA communications. Visit our website and read our material as the rescue package gets implemented.