CPAs’ role in the political process

Within the next few weeks I expect to be involved in the filming of a video by the New Jersey Society of CPAs about the importance of CPAs’ legislative involvement. Here is the Illinois version of the same topic: https://www.youtube.com/watch?v=lB_eKQlri-o. While I’m not the filmmaker and am not in any position of charge of the project, I would hope that my input involves more of a “Main Street guy” influence and less of the “society leadership to state leadership” that the IL film projects. IMHO a group of middle age white guys in navy suits standing around talking amongst themselves makes for a pretty dry video. I’d rather see the effects of that effort as played out in real businesses and the lives of people in our communities.

Non-permitted contingent fees and commissions for CPAs

Over the past month two of my web sites have received a growing numbers of visitors from Google and Bing search queries requesting examples of non-permitted contingent fees for CPAs. It appears that they come from multiple sources but I can not explain the sudden public interest. The reason, I suppose, is that I’ve written about two topics peripherally related to the subject: CPAs acting as regulated navigators for the Health Insurance Marketplace and, more recently, various social media posts about how I love the new AICPA Statement of Standards in Personal Financial Planning Services. Each of these posts is only cursory; I’m certainly not an expert on either topic.

The topic is interesting to me and so I find it a bit disturbing that there seems to be little information available to the public who may ask “What types of contingent fees or commissions are not allowed for CPAs?” It seems easy to explain that there are two simple and obvious categories of fees that are not allowed and I think that this information ought to be more obvious to the public.

The first area of restriction is for attest clients, AKA audit clients. While this is an important restriction, it applies only to the relatively small number of clients that require some type of independent audit service. Most clients do not, so this restriction does not apply. This restriction rarely applies to a typical CPA’s individual tax or advisory clients because the large majority of CPAs working in this field do not perform audits. As a result this restriction has little significance for most people, especially those who would be searching the internet for information on this topic. For the purposes of my social media posts when I do not perform any audits, I can simply skip this discussion.

The second area of restriction had much wider application. It applies to disclosure of fees and compensation. CPAs are required to disclose contingent fees and commissions. Conversely, a contingent fee or a commission that is undisclosed is not permitted.

This second topic apparently has the potential to trigger multitudes of follow-up questions like “examples of non-permitted fees” or “cases of non-permitted fees”. What does “disclosed” specifically mean in relation to the timing of typical client work? Does this mean the fee specific to a client or the CPA’s total cash and non-cash compensation related to firms that handle such transactions? What about endorsement contracts that extend for periods longer than the client engagement; does this mean compensation only during or before and after as well? All of these questions are likely to come up as consumers search for information governing CPA performance.

As a real life example, my work related to publication of consumer information related to the Affordable Care Act and its required insurance products earns me fees from insurance exchanges and insurance companies. I’m not licensed as an Obamacare agent or navigator but do receive fees for writing, endorsing and referring. As far as I know these fees have never been connected to an individual accounting or planning client. But the point is that I would not know if it was connected and so how would I be able to disclose it? Is simply stating that I receive contingent fees and commissions from the companies I endorse sufficient? If I wanted to make a more specific disclosure, how would I approach that since the amounts change monthly without any data that would allow me to connect the specific fee with a specific client?

The structure of today’s financial services and health care industry is ridiculously complicated and I don’t presume to have any of these specific answers. Rather, I would continue to rely on the basic principle that contingent fees and commissions must be fairly disclosed under the professional standards known as “ET sections” (the old rules that apply to all CPAs) as well as the new AICPA standards of practice for personal financial advisers.

Recent criticism of my writing

I’ve written something, somewhere, intended for public exposure almost every day for the past 35 years. It started with the college newspaper then moved to electronic bulletin boards and early online class discussions. I was one of the first moderators for Financial Planning Online forum when peer-moderated professional groups thrived without spam. I wrote a number of newspaper columns in the 1990s and was able to gather significant online exposure to boost my career before the term “blog” was invented. It was natural that my writing about health care reform served as a lightening rod in the early 2000s for those with a political agenda or economic interest in the outcome. But by the time the term “social media” became popular, I was lost in the huge blast of voices and therefore insignificant.

So it comes as a surprise that lately I’ve been getting so much criticism for my writing from other CPAs. In this age of such volume of opinions expressed, I’m surprised that anyone really cares about just one more voice on the Web. Earlier this month one senior level professional basically told me to shut up and don’t contradict industry leaders with my unfounded opinions. Another said it was inappropriate to relay tax advice that was shared in an email with the public, even though it was generic advice. A third wrote that my online shared library of sample employee benefit plan documents might be a crime under New Jersey state law (practicing law without a license).

What do these complaints have in common? The only thing I can see is lack of tolerance for diverse opinions, approaches and personalities. Simply put, some professionals think they can characterize what is right, correct, legal or appropriate. I’m not so sure today’s issues worth writing about are as simple as that.