The Road Less Traveled The Road to 2020 - NASBA · The Road Less Traveled Founded in 1908, the National Association of State Boards of Accountancy (NASBA) serves as a forum for 55

2008 Annual Report

The Road Less TraveledThe Road to 2020

The Road Less TraveledFounded in 1908, the National Association of State Boards of Accountancy (NASBA) serves as a forum for 55 boards

of accountancy, including state boards in the 50 states, the District of Columbia, Guam, Puerto Rico, Virgin Islands

and the Commonwealth of the Northern Mariana Islands. Through its volunteer committee network, programs and

services, NASBA protects the public interest by assisting the boards of accountancy.

Contents

02040521273541

Message

Mission

Committee Reports

Leadership

Year in Review

Programs & Services

Financial Statements

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2008 NASBA Annual Report

NASBA--ON A ROAD LESS

While working for the state boards of accountancy, NASBA’spath has often diverged from popular and heavily traveledtrails. To remain true to our charge as regulators, it has beenour practice to seek the high road, do the right thing, andoft-times step where few, if any, have trodden. As Frostconfirms, it often makes “all the difference.”

The very nature of our mission—to enhance theeffectiveness of state boards of accountancy—is a “roadless traveled,” but a road that must be taken. Boards ofaccountancy comprise the largest accountancy regulatorybody in the world, and yet, at times, the older and moretraditional paradigms that exclude boards and NASBA fromdecision-making on important national and internationalissues are a continuation of the worn-out paths we’ve beendown before. We’ll not remain on a road that ignores thestates whether it’s International Financial ReportingStandards (IFRS) or whether it’s any number of nationalissues. The “road less traveled” may mean the boards andNASBA will be challenged, as they take time to vet IFRS asthe convention to replace GAAP in the largest economicpower in the history of the world.

The Uniform Accountancy Act (UAA) and Rules are a modelfor our states, which places accountancy regulation in arare position. No other association of regulators of anational profession can point to the kind of success NASBAand the boards are experiencing with adoption of the UAAand, more specifically, its mobility provisions based on theconcept of substantial equivalency. On January 1, 2007, wehad four states with mobility language (No notice, No fee,No escape); We now have 31 states, and by this time nextyear, we’ll have 40-45 states with laws and rules which, ineffect, grant practice privileges throughout the U.S. and itsjurisdictions. Now, that’s a road not well traveled!

NASBA’s Compliance Assurance Committee is makingstrong progress among our states in requiring effectivetransparency of peer review reporting, as well asestablishing independent and objective oversight of thepeer review process.

NASBA’s Center for the Public Trust (CPT) began three yearsago on a barely visible path—a road, however, that had tobe taken. It is the road that we believe will lead to asuperhighway of action on ethics, upright behavior andbest practices and continued recognition of companies,CEOs, CPAs, attorneys and other professionals who choosethe honorable, the just and, sometimes, that “road lesstraveled.”

There is never an end to new roads or extended roads totravel. Over the next three years, NASBA will continuebuilding the momentum established in 2008 by enhancingservices to our boards, the profession and other clients andcustomers. In September 2009, NASBA will showcase our first

CPE Expo in San Antonio, TX, bringing high quality CPERegistry providers, exhibitors, accountancy board members,representatives of the profession and CPAs seeking CPEcourses together in one comprehensive venue.

We’ll continue to add states’ licensure information to theAccountancy Licensee Database (ALD). ALD is on themove simply because in this mobile world, boards ofaccountancy need an effective means to monitor licenseesno matter the state of licensure. We will continue to fosterthis program until 100 percent of all states and jurisdictionsare members. It’s a road the public expects us to take,however rare it is among other professions.

While we respect and appreciate our past accomplishmentsand successes, we are now focused on the future andpeeking at roads that lead us 12 years forward to 2020.These roads will take us to renewed emphasis on thecomputerized CPA examination, careful consideration of aninternational CPA examination, teaching ethics through theNASBA CPT, becoming a leader in licensure best practices,utilizing innovative technologies, reaching new marketsthrough Professional Credential Services (PCS) andpromoting state boards’ influence in global licensure.

Sometimes it is challenging to see clearly the road not takenby the majority. But we in NASBA and our member boardsknow that “those who see the invisible can do theimpossible.” And the “impossible” is almost always found atthe end of “the road less traveled.”

Sincerely,

Samuel K. Cotterell, CPA Chair

David A. Costello, CPAPresident & Chief Executive Officer

Joseph T. Cote, CPAExecutive Vice President & Chief Operating Officer

I shall be telling this with a sighSomewhere ages and ages hence:

Two roads diverged in a wood, and I—I took the one less traveled by,

And that has made all the difference.

(“The Road Not Taken”-by Robert Frost)

From Left to Right: Joseph T. Cote, CPA, EVP & COO, David A. Costello, CPA, President & CEO, and Samuel K. Cotterell, CPA, Chair

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Our Mission

To enhance the effectiveness of state boards of accountancy.

Our Goals

� Provide high quality, effective programs and services.

� Identify, research and analyze major current and emerging issues affecting state boards of accountancy.

� Strengthen and maintain communications with member boards to facilitate the exchange of ideas and opinions.

� Develop and foster relationships with organizations that impact the regulation of public accounting.

Core Values

� Preserve the public trust and confidence in the CPA license and credential.

� Support the licensing of individuals who demonstrate and maintain competence through education, examination

and experience requirements.

� Ensure that the integrity, objectivity and independence of licensees are not compromised.

� Foster compliance with ethical and all professional standards.

� Promote the rights of boards of accountancy to regulate licensees in all their professional activities.

Our Vision

To be and to be known as the clear, trusted and leading voice of state boards of accountancy

serving the public interest.

CommitteeThe achievements of an organization are the re

the combined effort of each individual. - Vince

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The Accountancy Licensee Database (ALD) Task Force wasnewly appointed in April 2008. The ALD was implemented in2005 as a central repository of licensee and firm informationprovided and kept current by boards of accountancy. Theprimary purpose of the ALD is to assist boards with theirregulatory efforts. Ideally, the ALD will become the mostcomprehensive, current and accurate source of licensinginformation about individual licensed accountants andaccounting firms in the U.S. By early 2008, only 15 boardswere actively contributing to and using the ALD. The goal ofthe Task Force is to assist boards in overcoming anyobstacles they may face in participating in the ALD.Obstacles include privacy concerns, policy issues andtechnical difficulties in exchanging data. Since the TaskForce was formed, three additional boards have joined theALD and nine have committed to joining. As a result, thetotal number of participating boards is expected to increaseto 27 sometime in 2009.

Chair: Daniel Sweetwood (NE)

Members: Rebecca Adams (CT)Patti Bowers (CA)Mark Crocker (TN)Daniel J. Dustin (NY)Heidi Patterson (IA)Richard C. Sweeney (WA)Robert Streifer (CO)Viki A. Windfeldt (NV)Lisa Zolman (WA)

Staff Liaisons: Joseph T. CoteKenneth Denny

ACCOUNTANCY LICENSEE DATABASE (ALD) TASK FORCE

The Administration and Finance Committee monitors thefiscal operations of the Association. Walter C. Davenport,NASBA Treasurer, serves as chair of the Committee. TheBoard of Directors relies on the Administration and FinanceCommittee to provide oversight of the Association’sfinancial performance from operational and investment-related activities. The Committee met four times during thefiscal year and reviewed the financial policies, financialstatements and projected operating results of both NASBAand its wholly-owned subsidiary, Professional CredentialServices, Inc.

The Committee also reviewed insurance coverages, internalcontrols and operating and capital budgets. TheInvestment Committee, a Subcommittee of theAdministration and Finance Committee, reviewed theperformance of NASBA’s short-term and long-terminvestments and monitored compliance with the board-approved investment policy of the Association.

Chair: Walter C. Davenport (NC)

Members: John W. Clay (KY) David D. Duree (TX)John E. Katzenmeyer (OH)Leonard R. Sanchez (NM) E. Kent Smoll (KS) Kim Tredinnick (WI)

Staff Liaison: Michael R. Bryant

ADMINISTRATION AND FINANCE COMMITTEE


The Bylaws Committee met via conference call twice in2008. During the calls, Committee members reviewed theBylaws to determine any necessary changes. TheCommittee decided that no changes were necessary at thistime.

Chair: John E. Katzenmeyer (OH)

Members: Myra A. Swick (IL)Patrick McCarthy (LA)

Staff Liaison: Alfonzo Alexander

BYLAWS COMMITTEE

The Awards Committee met in July 2008 to review thenominations and make recommendations to the NASBABoard of Directors for the William H. Van Rensselaer Award,the NASBA Distinguished Service Award and the inauguralLorraine P. Sachs Standard of Excellence Award. This year’saward recipients are John B. Peace of Arkansas (William H.Van Rensselaer Award), Harold D. Hein of Colorado (NASBADistinguished Service Award) and Carol Sigmann ofCalifornia (Lorraine P. Sachs Standard of Excellence Award).The Lorraine P. Sachs Standard of Excellence Award isnamed in honor of the former Chief Operating Officer ofNASBA.

Chair: Welling W. Fruehauf (PA)

Members: Andrew P. Marincovich (CA)Harris W. Widmer (ND)Kenneth J. Hull (IL)Michael D. Weatherwax (CO)


AWARDS COMMITTEE

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Operational examination issues and enhancementscontinued to be the focus for the CBT AdministrationCommittee. The Committee reviewed and approved theoperational procedures for the Biometric IdentityManagement System, implemented by Prometric. At therequest of the BOE, the Committee revisited the retentionperiod for Biometric’s data and selected a five-year periodthat is based on the candidate actively testing.

The Committee participated in the survey from the BOE thatprovided information regarding the enhancements to thecomputer-based examination.

Also, the Committee said good-bye to one of its originalmembers, Carol Sigmann, as she retired from the State ofCalifornia. Carol provided major support and insight to theCommittee and will be greatly missed.

The CBT Administration Committee continues to be a greatasset to the examination process as they considerexamination issues that are faced on a daily basis throughoutthe year.

Chair: Daniel J. Dustin (NY)

Members: Robert N. Brooks (NC) Richard C. Carroll (KY) Michael A. Henderson (LA) Barbara R. Porter (ID)Ronald J. Rotaru (OH)Carol Sigmann (CA)Patricia Soukup (NM)

Staff Liaisons: Denise HanleyPatricia L. Hartman

CBT ADMINISTRATION COMMITTEE

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In 2006, the Special Examination Issues Task Force issued areport to NASBA’s Board of Directors calling for additionalstudy in two areas related to the CPA Examination –international delivery of the Exam and preparing for theExam’s future. As a result, the Committee onInternationalization of the CPA Examination and theCommittee on National Examination Preparedness wereformed.

The Committee on Internationalization of the CPAExamination formed a joint effort with the AICPA andPrometric and studied why international candidates havesuch an interest in taking the CPA Examination and howmany international candidates might take the CPAExamination if it were offered internationally. Study findingsindicate that many international candidates take the CPAExamination in order to progress in their employment in theirhome countries without ever intending to seek licensure inthe United States.

The Committee came to believe that if the CPAExamination were offered in international locations, manymore international candidates than the current 7,000 wouldlikely take the Examination.

The Joint Committee concluded that the CPA Examination

could be offered internationally, if international candidateswould agree to meet certain conditions. For example,international candidates might agree to either take alicensure track, or, if they did not intend to seek licensure,agree to meet certain additional requirements that wouldparallel the requirements that licensed CPAs must meet. TheJoint Committee is continuing to meet and hopes to havean operating plan developed by the end of 2008.

Chair: John B. Peace (AR)

Members: Gary L. Fish (IL)John M. Greene (SC)Nina B. Kavich (NE)Wendy S. Perez (CA)William Treacy (TX)

Staff Liaison: Joseph T. Cote

COMMITTEE ON INTERNATIONALIZATION OF THE CPA EXAMINATION

The Committee focused on two projects: developing acontingency exam should the current CPA Examination notbe available (for any reason) and preparing for the optimalcourse of action when the current CBT Services Agreement(between NASBA, the AICPA and Prometric) ends in 2014.The Committee studied the factors that need to beconsidered in developing and delivering a contingencyCPA Examination. The Committee also identified factorsthat should be considered in a new or extended CBTServices Agreement. During the Committee’s meetings withthe AICPA, the AICPA requested that the current CBTServices Agreement be extended so that its capitalizeddevelopment costs (approximately $44 million) could beamortized over a longer period of time and, thus, enablingthe AICPA to maintain lower candidate fees. Once theCommittee reached certain preliminary conclusions, itsponsored a Conference on the State of the Examinationon May 19, 2008. At this Conference, state board membershad the opportunity to comment on the Committee’s ideas.

The Committee then issued a report to NASBA’s Board ofDirectors. The Board plans to enter discussions with theAICPA regarding the possibility of extending the CBT ServicesAgreement and how to deal with various possiblecontingencies.

Chair: Wesley P. Johnson (MD)

Members: Sheila Birch (OH)Daniel J. Dustin (NY)Gary W. Heesacker (WA)Kathleen J. Smith (NE)


COMMITTEE ON NATIONAL EXAMINATION PREPAREDNESS

The Communications Committee is charged to developand promote innovative and unique programs andmethods for communications by state boards ofaccountancy and NASBA with other agencies, consumers,the CPA profession and legislative bodies. During the 2007-2008 year, the Committee centered its focus on the role ofthe state board Communications Officer. At the June 2008Regional Meetings, Committee Chair Sally Flowers andmembers of the Committee hosted a breakout session forboard members to discuss the role of the CommunicationsOfficer, introduce the new Committee Web page andprovide a platform for the sharing and exchange of stateboard initiatives. In particular, the public awareness toolsand outreach initiatives currently in use by state boards ofaccountancy were discussed. In addition, they will host ameeting of Communications Officers during the 101stAnnual Meeting to demonstrate the architecture, usefulnessand content of the Committee site.

In the 2008-2009 year, the Committee will work closely withthe state board Communications Officers to implementcommunications initiatives and programs to furtherenhance public awareness and outreach.

Chair: Sally Flowers (CA)

Members: Jim Abbott (ND)Norman Wade Biswell (OK)Nancy L. Bruner (IA)Margaret A. Cartier (IL)Jefferson Chickering (NH)Mark T. Hobbs (SC)Nicole L. Olson (SD)Arnold Williams (MD)

Staff Liaison: Thomas G. Kenny

COMMUNICATIONS COMMITTEE

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The Compliance Assurance Committee completed its workthrough three subcommittees as follows:

� Task Force to Address Oversight Issues: review components of the AICPA Peer Review Oversight Model

� Task Force on Adoption and/or Continuation of Mandatory Peer Review in all 55 jurisdictions and UAA Rules 7-2 through 7-5, as crafted in 2007 regarding compliance assurance, oversight and transparency

� Peer Review Oversight Committee Implementation Task Force

The Committee’s objective was to develop and promoteoversight for state boards of accountancy vis à vis PeerReview. The guiding principles of oversight being promotedwere: ensuring a program that is effective and uniform; andincreasing transparency increases understanding andconfidence. Committee Chair Mark P. Harris provided acomprehensive overview of the CAC’s initiatives at eachRegional Meeting and distributed the following materials:

� State Board Peer Review Status Map� Facilitated State Board Access Program Update� Peer Review Oversight Model Background &

Descriptions� Tentative Schedule of Oversight Task Force Visits in 2008� State Board Compliance Assurance Oversight

Committee Statement & Key Provisions� MS Board Oversight Committee Report� Definitions and Related Acronyms� Excerpts of UAA Article 7—Related to CAOC

and Submission Rules

� Sample Oversight Visit Reports

The highlight of the year was the Peer Review OversightCommittee (PROC) Conference, which was held inNashville, TN on September 22, 2008. This effort was led byChair Mark Harris and Subcommittee Chair Jimmy Burkes.The purpose of the conference was:

� To discuss the important role of PROCs, from their perspective

� Determine how to coordinate PROCs with peer review program oversight models

� Obtain insight toward implementation and coordination of PROCs

� Provide a forum to discuss current and future Peer Review Standards and Administration

Chair: Mark P. Harris (LA)

Members: Jimmy E. Burkes (MS)James S. Ciarcia (CT)Charles W. Clark (ID)Doris Cubitt (SC)Alicia J. Foster (MD)James W. Goad (AR)Janice L. Gray (OK)J. Lamar Harris (AL)Henry Krostich (NY)Sharon J. McNair (NV)Robert Petersen (CA)Virginia A. Powell (KS)

Staff Liaison: Lisa J. Axisa

COMPLIANCE ASSURANCE COMMITTEE

“Based on our review and evaluations, it is our opinion thatboards of accountancy may rely on the 2007 Uniform CPAExamination and the International Uniform CPA QualificationExamination in carrying out their licensing responsibilities,”reported CPA Examination Review Board Chair BartonBaldwin during his presentations of the ERB Annual Report tothe 2008 Regional Meeting participants. The ERB presented acomprehensive management letter to the CPA LicensingExaminations Committee. The recommendations in thisdocument were distributed via a matrix to all boards ofaccountancy in late August.

The ERB also performed an analysis of NASBA and theAICPA’s examination costs. Based on their analysis, the ERBdid not note any material exceptions to the AICPA or NASBAoperational expenses for the fiscal years ended July 31, 2006and 2007.

Chair: Barton W. Baldwin (NC)* 2007-2008Donald E. Howard (MD) ** 2008-2009

Vice Chair: Charles L. Talbert, III (SC) **

Members: O. Charlie Chewning, Jr. (NC)Philip W. Gleason* (MN)Asa L. Hord (KY)David King (TX) **Will J. Pugh (TN)Donald R. Roland (GA)David A. Vaudt (IA)Robert G. Zunich (OH)

Psychometric Consultant: Steven M. Downing, Ph.D.

IT Consultant: Michael W. Harnish, CPA, CITP

Staff Liaison: Lisa J. Axisa

*Term ended June 30, 2008**Term began July 1, 2008

CPA EXAMINATION REVIEW BOARD (ERB)

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The CPA Licensing Examinations Committee is charged withcommunicating with boards of accountancy and otherswith a vested interest in both the Uniform CPA Examinationand the International Uniform CPA QualificationExamination (IQEX) to ensure the boards are provided withthe best professional licensing examinations possible. Toachieve that goal, the Committee asked boards to providefeedback so that positive aspects would be retained andnegative aspects addressed. The feedback confirmed thatthe Committee was focused on the appropriate subjects,including composition of the AICPA’s Board of Examiners(BOE), candidate concerns about the examinations, thepractice analysis project, the effectiveness of simulations onthe CPA Examination and the coverage of ethics on theCPA Examination. Again this year, the Committeecoordinated NASBA’s efforts to submit highly qualifiedindividuals to serve on the BOE and its subcommittees.

Chair: Robert A. Pearson (MO)

Members: Kay C. Carnes (WA)Rick Elam (MS)Peggy Morgando (WY)Richard Reisig (MT)Thomas R. Weirich (MI)Janice B. Wilson-Marcum (CA)


CPA LICENSING EXAMINATIONS COMMITTEE

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Throughout 2008, the CPA Mobility Task Force has beenengaged in a major effort to advance the adoption ofSections 7, 14 and 23 of the UAA which provide for “Nonotice, No fee and No escape” for CPAs who engage inpractice across jurisdictional boundaries. Twenty-eightstates have now adopted provisions through legislation orrule changes that implement “mobility” consistent with theprovisions of the UAA. Three additional states haveimplemented provisions that provide limited mobility byextending practice privileges to other mobility states (quid-pro-quo). This is an increase of 17 states over 2007 for a totalof 31. A total of 14 additional state boards of accountancyhave voted to support and move toward the adoption ofmobility provisions. Twelve of these states have draftedlegislation for consideration in the 2009 legislative sessions.The Task Force has worked closely with the CPA SocietyExecutives Association, AICPA, and the AccountantsCoalition in this endeavor.

NASBA has also adapted the NASBAtools.com Web site tobe “mobility friendly” to help CPAs easily find the informationthey need to understand their responsibilities in seekingpractice privilege across jurisdictional boundaries.

Chair: Ronald J. Rotaru (OH)

Members: Albert J. Cannon (OH)Ellis M. Dunkum (VA)Thomas J. Kilkenny (WI)Theodore W. Long, Jr. (OH)Cynthia H. Norwood (VA)Kenneth R. Odom (AL)Robert H. Temkin (MA)Laurie J. Tish (WA)Douglas E. Warren (TN)Arthur M. Winstead, Jr. (NC)

Staff Liaisons: Ed BarnicottKen L. BishopMaria L. Caldwell

CPA MOBILITY TASK FORCE

During 2007-2008, the CPE Advisory Committee was focusedon its mission, to monitor the Statement on Standards forContinuing Professional Education (CPE) Programs toencourage implementation by state boards and to developaids and interpretations of the Standards. The Committeeconvened three times during the year to discussinterpretations and address sponsor appeals. Additionally,the Committee chair along with staff met twice with theFlorida Board of Accountancy to discuss improvements tothe Quality Assurance Service program.

Chair: Theodore W. Long, Jr. (OH)

Members: Thomas S. Chambers (MD)Courtney Cowgill (CO)Ruben A. Davila (CA)Carole M. Hersch (VA)Archer M. Honea (OK)Adley E. Johnson (KS)Telford A. Lodden (IA)John Steven Marcum (KY)John McManus (DE)L. Martin Miller (PA)John R. Rogers (IL)Ramanik Shah (MN)Willie B. Sims, Jr. (MS)Robert H. Sommer (NJ)Taling M. Taitano (GU)Mark Weinstein (NM)Richard Zacharia (NE)

Staff Liaisons: Carla BlakeYordanos Dumez

CPE ADVISORY COMMITTEE

The Education Committee had a very active year finishing itswork on the changes to the UAA Model Rules 5-1 and 5-2.The Committee posted an exposure draft of itsrecommendations on the NASBA Web site from November2007 through January 2008 for feedback from all interestedparties. Approximately 40 boards, organizations, academicinstitutions and individuals submitted feedback to theCommittee. After incorporating portions of therecommendations received, the Committee presented itsproposed changes to the model rules to the NASBA Board ofDirectors who unanimously accepted the changes.

The Education Committee also worked with the RegulatoryResponse Committee in February 2008 to respond to asurvey submitted by IFAC Education Standards Board.Members of both Committees participated in a conferencecall to agree on the answers to the survey questions. TheEducation Committee then submitted the responses to theIFAC representing NASBA’s official position. Billy Atkinson,committee chair, also began discussions with the AmericanAccounting Association (AAA) leadership with a goal ofstrengthening NASBA’s relationship with the Association.

Chair: Billy M. Atkinson (TX)

Members: Charles H. Calhoun, III (FL)Douglas W. Skiles (NE)James C. Flagg (TX)Joanne Vician (IL)John E. Peterson (SD)Kathleen K. Mooney (MN)Melanie G. Thompson (TX)Nicholas J. Mastracchio, Jr. (FL)Patrick D. McCarthy (LA)Penelope Yunker (IL)Ronald E. Nielson (IA)Sonia Gomez de Torres (PR)Stephen C. Del Vecchip (MO)


EDUCATION COMMITTEE

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The Ethics Committee began its work with a conference callon December 18, at which time task forces were establishedto achieve the following:

� consider standardization of ethics enforcement� monitor the AICPA’s Professional Ethics Executive

Committee’s (PEEC) projects� monitor international ethics standards setting

Several conference calls were held throughout the year andthe Committee held a meeting in Dallas on May 20. Duringeach gathering, PEEC members Harry Parsons and GaylenHansen advised the Ethics Committee on the issues beingdiscussed by PEEC which could have an effect on stateboards or NASBA.

At NASBA Board Meetings, several formal recommendationsfrom the Committee were presented by Chair Parsons.These included:

� NASBA should seek increased representation on the AICPA’s PEEC.

� NASBA should continue to educate the memberboards on international standards developments and continue educating international bodies on the key role the boards play in regulating the U.S. accounting profession.

� NASBA should continue its efforts to secure a place on the international standard-setting forums.

� NASBA should take steps to create a national enforcement board. Michael Weinshel, who is a past chairman of the AICPA’s Joint Trial Board, took a lead role in drafting the outline for this proposed project.

At both 2008 Regional Meetings, the Ethics Committeeworked with the CPE Advisory Committee to facilitate adiscussion of how ethics education and CPE requirementsare being implemented in the states. The Ethics Committeeis also working with the NASBA Regulatory ResponseCommittee to develop responses to exposure drafts relatedto ethical standards.

Chair: Harry O. Parsons (NV)

Members: Rona Cherno (NY)Tyrone Dickerson (VA)Susan M. Harris (MS)James A. Landaker (OH)Marianne Mickelson (IA)Larry E. Nunn (IN)Vicky Petete (OK)Michael Weinshel (CT)Cecil Wood (MO)

Staff Liaison: Louise Dralter Haberman

ETHICS COMMITTEE

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In June 2007, the President’s Council on Integrity andEfficiency issued the Report on National Single AuditSampling Project. It was performed to determine the qualityof single audits and to make recommendations to addressnoted audit quality issues. State boards of accountancywere specifically identified as responsible parties inmaintaining the high-quality work of certified publicaccountants.

The Task Force eagerly met with representatives from theOffice of Management and Budget (OMB), theGovernment Accountability Office (GAO), and variouscognizant/oversight federal agencies to identify amechanism to effectively deal with substandard work thathas been identified by these agencies. The series ofmeetings resulted in the development of the GovernmentAgency Referral Program, which went into effect in the fallof 2008, and will provide for enhanced communicationbetween state boards and federal agencies. Furthermore,the Task Force developed a plan for NASBA to moveforward with consideration of an Enforcement AssistanceProgram for state boards.

Chair: Ellis M. Dunkum (VA)

Members: Gerald W. Burns (OR)Dwight J. Hadley (NY)Laurie J. Tish (WA)

Staff Liaison: Linda L. Biek

GOVERNMENTAL AGENCY REFERRAL TASK FORCE

The Executive Directors Committee represents the executivedirectors of the 55 boards of accountancy. The Committeeis dedicated to the objective of learning from each other.The Twenty-Sixth Annual Conference for Executive Directorsin Austin, TX, achieved that objective as executivedirectors discussed topics such as enforcement, mobilityand international interaction. States who havesuccessfully worked through these issues were eager toshare their strategies with fellow executive directors.Attendees praised the event as “one of the bestconferences ever.”

Chair: Viki A. Windfeldt (NV)

Members: J. Lamar Harris (AL)Pamela Ives Hill (MO)Heidi Patterson (IA)Edith Steele (OK)Richard C. Sweeney (WA)Daniel Sweetwood (NE)


EXECUTIVE DIRECTORS COMMITTEE

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In recognizing the pace of the global economy, NASBAleadership appointed a group of distinguished individuals toidentify the international governmental entities that regulatethe practice of public accounting. The Committee thenestablished contact to determine if there was an interest inconvening a conference to discuss accounting, auditingand ethics standards. The culmination of efforts resulted inthe NASBA Forum of International AccountancyRegulators in Boston, MA. Attendees from as far as China,New Zealand and the European Union gathered toevaluate the current trend toward globalization while stateboard members walked away with a better understandingof how to address international issues within their borders.

Chair: Michael D. Weatherwax (CO)

Members: Charles H. Calhoun, III (FL)John G. D. Carden (AL)Robert L. Gray (NY)Gaylen R. Hansen (CO)Mark P. Harris (LA)Wesley P. Johnson (FL)Grace M. Lopez-Williams (GA)William Treacy (TX)

Staff Liaisons: Linda L. BiekMaria L. Caldwell

INTERNATIONAL REGULATORS CONFERENCE COMMITTEE

The NASBA/AICPA International Qualifications AppraisalBoard continued to correspond with non-U.S. professionalassociations interested in establishing mutual recognitionagreements with the U.S. profession. Beginning in November2007, the task forces included: Hong Kong Institute of CPAsTask Force; Four E’s Evaluation Criteria Scoring Template;National Institute of Accountants (Australia) Task Force; IQABCommunications Task Force; U.S. IQAB Procedures andQuestionnaire Task Force; and BOE InternationalQualifications Examination Task Force. By the April 17, 2008IQAB meeting in Alexandria, VA, the following weredetermined:

� An organization should be able to directly apply to NASBA or the AICPA for consideration for a mutual recognition agreement, rather than first requiring a state board to recommend such a study be undertaken.

� IQAB’s application review procedure should take into consideration information obtained from the World Bank as well as the International Federation of Accountants (although membership in IFAC should not be required for partnership).

� Continue to utilize a template for evaluating applications to ensure consistency in present and future evaluations.

� Recommend that the administration of the IQEX, which is currently in November, be moved to late

summer/early fall and that the AICPA and NASBA investigate administering IQEX in all countries where there are MRA partners.

� Renew the tri-party MRA linking the U.S., Canadian and Mexican professions. A signing ceremony for the renewal was conducted in Alexandria, VA, which was attended by representatives of NASBA, the AICPA, Canadian Institute of Chartered Accountants, the Instituto Mexicano de Contadores Publicos and government officials.

Chair: William Treacy (TX)

Members: Sheila M. Birch (OH)Charles H. Calhoun, III (FL)Kay C. Carnes (WA)Kermit Lucena (PR)Leonard R. Sanchez (NM)

Staff Liaisons: Louise Dralter HabermanPatricia L. Hartman

INTERNATIONAL QUALIFICATIONS APPRAISAL BOARD

The Legislative Support Committee focused this year on thedevelopment, launch and growth of its page on the NASBAWeb site. The page was conceived by the 2006-2007Legislative Support Committee, leaving its design andcontent to be finalized and worked through with NASBA staffby the 2007-2008 Committee. The page contains sectionson: resources, publications, news, letters, testimony andstrategies. At the 2008 State Board Executive DirectorsConference, the Legislative Support Committee distributedinformation prepared by Richard Sweeney, executivedirector of the Washington Board, which discussed the siteand suggestions that were collected from the executivedirectors. The Committee recognized that the executivedirectors are key to keeping the page supplied with usefulmaterial and having the page benefit the member boards.

To strengthen the communication link with the executivedirectors, Chair Johnson appointed a task force of RonaldRotaru, executive director of the Ohio Board, and Mr.Sweeney, to create a network of executive directors, eachof whom would lead a team of executive directors(approximately six) who would be contacted on a monthlybasis for information to be posted to the Committee’s page.The information would provide resources to increase thelegislative effectiveness of state boards of accountancy.Besides including information regularly provided by theMobility Task Force, the page offers guidelines, letters,articles, etc., that state boards have used in promotinglegislative initiatives. These range from a poll of the public’sunderstanding of the use of the word “accountant” to howto lobby effectively.

Chair: Carlos E. Johnson (OK)

Members: Donald H. Burkett (SC)Sharron Cirillo (DE)Stephen Epstein (MI)Joyce Green (SC)John H. Hawkins, Jr. (KY)Raymond Johnson (OR)Marshal A. Oldman (CA)Ronald J. Rotaru (OH)Richard C. Sweeney (WA)


The Nominating Committee met in March to select acandidate for the position of Vice Chair. As a part of theselection process, each recommended candidatecompleted a questionnaire that included questions aboutspecific skills and experience that they could bring to NASBAthrough a leadership role. The members of the NominatingCommittee attended the 2008 Eastern and WesternRegional Meetings to meet and familiarize themselves withBoard nominees, following which, they met to select theircandidates for other Board positions. In accordance withthe NASBA Bylaws, the Committee submitted its report toNASBA Chair Sam Cotterell.

Chair: Wesley P. Johnson (MD)

Members: Dorothy M. Fowler (TX) Robert B. Cagnassola (NJ)John G.D. Carden (AL)Charles W. Clark (ID)Michael T. Daggett (AZ)Leonard W. Jones (NC)Nina B. Kavich (NE)Ray G. Stephens (OH)

Staff Liaisons: David A. CostelloAnita L. Holt

NOMINATING COMMITTEE

LEGISLATIVE SUPPORT COMMITTEE

16


17

The Regulatory Response Committee met via conferencecall when exposure drafts were released that could impactthe state boards’ regulatory and enforcementresponsibilities. During this committee year, responses weredrafted by the Committee, then approved by NASBA ChairSamuel Cotterell and President David Costello, and sent to:

� U.S. Securities and Exchange Commission – RE: Concept release allowing U.S. issuers to prepare financial statements in accordance with IFRS

� Public Company Accounting Oversight Board – RE: PCAOB Release No. 2007-011

� AICPA Professional Ethics Executive Committee – RE: Proposed Interpretation 501-8 Under Rule 501

� Financial Accounting Foundation - RE: Request for comments on proposed changes to oversight, structure and operations of the FAF, FASB and GASB

� International Accounting Education Standards Board (developed with NASBA Education Committee) – RE: Response to survey on enhancing accounting education

� Department of Housing and Urban Development – RE: Proposal for creation of an independent public accountant roster

� Department of the Treasury’s Advisory Committee on the Auditing Profession – Re: Comments on ACAP preliminary recommendations

The Committee is considering the revisions of the constitutionof the International Accounting Standards CommitteeFoundation and is also coordinating its efforts with theNASBA Ethics Committee to address changes proposed forthe “Code of Ethics for Professional Accountants” by theInternational Ethics Standards Board for Accountants.

Chair: Richard Isserman (NY)

Members: Alan J. Bronstein (VI)Gaylen R. Hansen (CO)Raymond Johnson (OR)Edwin G. Jolicoeur (WA)Leslie A. Mostow (MD)John C. Olsen (NY)Ray G. Stephens (OH)Robert H. Temkin (MA)



REGULATORY RESPONSE COMMITTEE

Established in 2000, members of the Past Chair AdvisoryCouncil have come together annually to provide insight intoNASBA’s performance and current issues based on theirexperiences. The Committee met prior to the 2007 AnnualMeeting and have another such meeting planned prior tothe 2008 Annual Meeting.

Chair: Wesley P. Johnson (FL)

Members: Barton W. Baldwin (NC)Sarah G. Blake (AZ)Milton Brown (NJ)Thomas F. Cardenga (MD) K. Michael Conaway (DC)Albert J. Derbes, III (LA)Robert C. Ellyson (FL)Welling W. Fruehauf (PA)Nathan T. Garrett (NC)John M. Greene (SC)

Thomas Iino (CA)Noel P. Kirch (OK)Andrew P. Marincovich (CA)John B. Peace (AR)Diane M. Rubin (CA)Ronnie Rudd (TX)Jerome A. Schine (FL)Wilbert H. Schwotzer (GA)Jerome P. Solomon (MA)Dennis P. Spackman (UT)Wilbur H. Stevens (CA)Sandra A. Suran (OR)David A. Vaudt (IA)Michael D. Weatherwax (CO)Sam Yellen (CA)


PAST CHAIR ADVISORY COUNCIL

The Committee, which includes all of NASBA’s RegionalDirectors, continued to reach out to the member boards togather their input on issues being addressed by theAssociation. This was accomplished through sending outfocus questions and analyzing their responses three timesduring the year, visiting state board meetings andmoderating regional discussion sessions during the Annualand Regional Meetings. The Regional Directors reportedregularly to the NASBA Executive Committee and Board onwhat they learned from the member boards.

Besides lending their support to the Mobility Task Force’sefforts, the Regional Directors asked to be part of the effortto have all states included in the Accountancy LicenseeDatabase.

Chair: Michael W. Skinner (GA)

Members: Donald H. Burkett (SC)Sally Flowers (CA)Claireen Herting (IL)Carlos E. Johnson (OK)Harry O. Parsons (NV)E. Kent Smoll (KS)Michael Weinshel (CT)Viki A. Windfeldt (NV)


The Committee struck out with a plan to address commentsfrom various federal agencies relating to the enforcementefforts of state boards. In response to these comments, theCommittee devoted time and energy to ensure thedevelopment of strategic relationships between stateboards and federal agencies. The Regulatory Structuresand Issues Committee will continue to develop standardsand processes for developing and responding to regulatoryand legislative initiatives.

Chair: Ellis M. Dunkum (VA)

Members: Patricia A. Crecco (NY)Valerie M. Elliott (AZ)Robert L. Gray (NY)Claireen Herting (IL)Robert J. Hyde (MN)Paul Thomas Mechsner (MO)Antonia B. Smiley (DC)Dena G. Williams (NY)


RELATIONS WITH MEMBER BOARDS COMMITTEE

REGULATORY STRUCTURES AND ISSUES COMMITTEE

18


19

The Strategic Initiatives Committee, charged to study whatis required to maintain state boards' relevance, monitoredinternational/global developments related to standardsetting and regulation, as well as activities of the TreasuryDepartment’s Advisory Committee on the AuditingProfession (ACAP). The Committee has continued to discussemerging issues related to IASB, IFAC and the potentialadoption of IFRS by the SEC and the effect these actionscould have on U.S. accounting, auditing, education, ethicsand related CPA Examination standards and practices.

On May 18, 2008, the AICPA officially designated the IASBas an authorized standard-setter and on August 27, 2008,the SEC proposed a “Roadmap” for adoption of IFRS bypublic companies beginning in 2014. The Committeerecommends that NASBA establish a clear position on thesesignificant developments and consider what, if any,changes are necessary to the Uniform Accountancy Act(UAA). NASBA should proactively update and educateboards of accountancy and other professional bodies ofthe direct impact IFRS adoption will have on accountancyrules, education requirements and examination practicesand, when requested, advise state boards of theappropriate measures to pursue in anticipation of thesechanges. To assist state boards in their regulatoryresponsibilities, NASBA should play a significant role in thediscussion, vetting and application processes ofinternational standards.

The Committee further recommended NASBA formcommittees to study the following areas and makeadditional recommendations for their administration,coordination and implementation efforts.

International Financial Reporting Standards (IFRS) – Activelyencourage colleges and universities to include IFRS in theircurriculums and work with the AICPA Board of Examiners toestablish appropriate timelines for changes in examinationcontent. In addition, NASBA should conduct an inventoryof state rules and regulations, and make recommendationsto the UAA and state boards in anticipation of the advent ofinternational standards in the U.S.

Accountancy Licensee Database (ALD) – Initial ACAPdiscussions to implement a national license that could havethreatened the current state-based regulatory system werelater dismissed due to state boards’ progress in adoptingUAA Section 23 mobility provisions. It was revealed thatpassage of practice mobility legislation is only the first step in

enhancing the regulatory oversight needed to implementa full mobility environment. Furthermore, the long-termsuccess of practice mobility is intertwined with an effectiveALD that will provide the necessary transparency forappropriate oversight of cross-border practice. TheCommittee strongly recommends all accountancy boardsadopt the ALD to fulfill their regulatory responsibilities.

State Board Independence – The intrinsic value of stateboards is increasingly under pressure from outside influences(including other state agencies) that can directly affectboard regulation and oversight. Financial and operationalindependence of boards of accountancy are key elementsto enhance state board regulatory authority and are criticalin assuring adequate investigations and enforcement. TheStrategic Initiatives Committee recommends the allocationof significant resources to assist state boards to achieveappropriate levels of independence.

Chair: Gaylen R. Hansen (CO)

Members: Kent Bailey (OR)

Gerald Burns (OR)

Lazaro Serrano Cid (PR)

Bobby Creech, Jr. (SC)

Richard G. David (MI)

Princy Harrison (MS)

David L. Koerwitz (WY)

Dan J. Rieke (AR)

Patrick M. Thorne (NV)

Lydia M. Washington (NY)

Staff Liaison: Thomas G. Kenny


STRATEGIC INITIATIVES COMMITTEE

The UAA Committee focused on making changes to theModel Rules. The changes include support for the “Nonotice, No fee, No escape” concept included in Section 23of the Uniform Accountancy Act, an update of theexamination-related rules to reflect the advent of thecomputer-based examination and an alignment ofterminology to conform to certain peer review concepts. Itis anticipated that the Model Rules proposals will be broughtto the October Board Meeting by Chair DuBoff, who will askthat they be approved for exposure for public commentfollowing the NASBA Annual Meeting. No changes to theUniform Accountancy Act were proposed during thiscommittee year.

Changes to Section 5 of the Model Rules, related to requirededucation, were developed and released as an exposuredraft by the Education Committee. With the approval ofthe UAA Committee, these were presented to the NASBABoard at its April meeting and adopted as submitted.

The UAA Committee has also approved the updating of theNASBA Substantial Equivalency chart to reflect changes incertain state boards’ requirements.

Chair: Andrew L. DuBoff (NJ)

Members: Ellis M. Dunkum (VA)J. Dwight Hadley (NY)Thomas J. Mulligan (OH)Robert A. Pearson (MO)Renata M. Sos (CA)Daniel Sweetwood (NE)James F. Thielen (FL)Laurie J. Tish (WA)Michael D. Weatherwax (CO)Stanley C. Wood (ID)

Legal Counsel: Noel L. Allen


UNIFORM ACCOUNTANCY ACT COMMITTEE

20


LeadershipGood business leaders create a vision, articul

vision, passionately own the vision and relentleto completion.

Front row from left to right: Michael Weinshel, Wesley Johnson, Joseph Cote, Samuel Cotterell, David Costello,

Billy Atkinson, Thomas Sadler, and Mark Harris.

Middle row from left to right: Gaylen Hansen, Kathleen Smith, Leonard Sanchez, Claireen Herting, Donald Burkett,

Viki Windfeldt, Robert Pearson, Sally Flowers, and Walter Davenport.

Back row from left to right: Kent Smoll, Carlos Johnson, John Katzenmeyer, Noel Allen, Michael Skinner, Harry Parsons,

and Andrew DuBoff.

23

2007 - 2008 Board of DirectorOFFICERS

Samuel K. Cotterell, CPA (ID)Chair

Thomas J. Sadler, CPA (WA)Vice Chair

Wesley P. Johnson, CPA (MD)Past Chair

Billy M. Atkinson, CPA (TX)Director-at-Large/Secretary

Walter C. Davenport, CPA (NC)Director-at-Large/Treasurer

Andrew L. DuBoff, CPA (NJ)Director-at-Large

Gaylen R. Hansen, CPA (CO)Director-at-Large

Mark P. Harris, CPA (LA)Director-at-Large

John E. Katzenmeyer, CPA (OH)Director-at-Large

Robert A. Pearson, CPA (MO)Director-at-Large

Leonard R. Sanchez, CPA (NM)Director-at-Large

Kathleen J. Smith, CPA, Esq. (NE)Director-at-Large

REGIONAL DIRECTORS

Donald H. Burkett, CPA (SC)Middle Atlantic Regional Director

Sally Flowers (CA)Pacific Regional Director

Claireen Herting, CPA, JD (IL)Great Lakes Regional Director

Carlos E. Johnson, CPA (OK)Southwest Regional Director

Harry O. Parsons, CPA (NV)Mountain Regional Director

Michael K. Skinner, CPA (GA)Southeast Regional Director

E. Kent Smoll, CPA (KS)Central Regional Director

Michael Weinshel, CPA (CT)Northeast Regional Director

EXECUTIVE DIRECTORS’ LIAISON

Viki A. Windfeldt (NV)


24

Professional Credential Servi


Milton Brown, PAChair

John Peace, CPA, Esq.

Andrew DuBoff, CPA

Samuel Cotterell, CPAEx-Officio

Thomas Sadler, CPA Ken BishopPresident

Andrea BledsoeCOO

Troy Walker, CPACFO

PCS Executive Staff

PCS Executive Board of DirectorsProfessional Credential Services, Inc. (PCS) was established in 1998as a wholly-owned for-profit subsidiary of the National Associationof State Boards of Accountancy (NASBA) to further expand serviceopportunities developed through NASBA's CPA ExaminationServices Division into non-accounting disciplines. PCS focuses onproviding examination development, examination administrationand licensure and certification services to state, national andinternational organizations responsible for the regulation andmanagement of occupations and professions.

PCS currently provides the delivery of services in the professions ofengineering, land surveying, geology, landscape architecture,tattooing and body piercing, cosmetology, barbering,chiropractic, nursing home administration, funeral services,occupational therapy, professional planning, nursing, pharmacy,waste water management, veterinary medicine, psychology,auctioneering, fire protection, radiology, interior design andpodiatry.

25


NASBA Center for the Public T

Alfonzo AlexanderVice President of Development

Milton Brown, PAChair

Larry Bridgesmith, Esq.

Noel Allen, Esq.

Linda Galindo

Quinton Booker, CPA

CPT Board of Directors

Mark Harris, CPA

C. Dan Stubbs, CPA

Leonard Sanchez, CPA

Charles Story

David Costello, CPAPresident & CEO

Lisa AxisaExecutive Director/Vice President

Michael Bryant, CPAChief Financial Officer

CPT Staff Board Members

Staff Directors and ManagersAlfonzo AlexanderChief Relationship Officer (CRO)Vice President of Development, Center for the Public Trust

Lisa Axisa Director, ERB and Special InitiativesExecutive Director/Vice President, Center for the Public Trust

Ed BarnicottChief Technology Officer (CTO)

Pam BergeronManager, Software Development

Tim Berry, PMPSr. Project Manager

Linda Biek, CPADirector, Governmental, International and Professional Relationships

Ken BishopPresident, PCS Examination OperationsSr. Vice President, CPA Examination Services and National Candidate Database Operations

Andrea BledsoeVice President/Chief Operating Officer(COO), Director, PCS Operations

Carla Blake, CPAManager, Sponsor Services

Michael Bryant, CPAChief Financial Officer (CFO)

Maria Caldwell, Esq.General Counsel Director, Business Development

Bridget CandlerManager, Instructional Design Review

Dean CarrollDirector, Infrastructure and Security

Joy ConkwrightSr. Project Manager

Matt CookManager, PCS Operations

Lisa DampfManager, Benefits

Sandra Davidson, CPAManager, Licensee Services

Stacey DouglasDirector, Software Development

Yordanos Dumez, CPADirector, Compliance Services

John FieldsSr. Project Manager

Jill Gordon Manager, Tradeshow

Meritta GrantManager, Accounts Payable

Cassandra GrayManager, Communications

Mary GreenManager, Business System Support

Stacey Grooms, Esq.Manager, Regulatory Affairs

Louise Dratler HabermanDirector, Information and Research

Denise HanleyChief Information Officer (CIO)

Patricia HartmanDirector, CPA Examination Servicesand National Candidate DatabaseOperations

Adam HerjeczkiManager, Special Accommodations

Allan HicksManager, PCS Application Processing

Karen HillDirector, Project Management Office

Cheryl Hutchings, CPAPCS Controller

Karen Johnson, CPAManager, Payroll Compliance

Randy JungManager, Operations - Guam Computer Testing Center

Linda KellnerDirector, PCS Exam Development

Thomas KennyDirector, Communications

Mary LaneManager, Facilities

Christy LewellenManager, Human Resources

Kathy LoveManager, CPA Examinations StateCoordinators

Angel LunnChief People Officer (CPO)

Jose ManzonManager, Guam Computer Testing Center

Chris MaysManager, National Candidate Database Operations

Michelle MillerManager, Software Development

Rachel NelsonManager, Candidate Services

Denny PhillipsManager, Print and Delivery Operations

Robbin PittarelliManager, National Business

Francine RanantoManager, PCS Cosmetology

Rebecca RodriquezManager, Business Development

John RolandManager, CPA Operations Accounting

Anne RussellManager, PCS Facilities

Morgan ScheelManager, Wall Certificate Service

Vanessa TaylorManager, Compliance

Butch ThomasManager, Software Development

Penny VernonManager, Candidate Care

Troy Walker, CPAController NASBA and Chief FinancialOfficer (CFO) PCS

Jan WinslettDirector, Quality Assurance

Andrew WolfordManager, Lotus Notes Administrator &Support Services

26


Year in ReviewThere are no speed limits on the road to excel

- Unknown

28

The Road to Mobility & ALDImplementationMOBILITY

State boards have long understood the public need to have

CPAs who are able to practice in multiple states, but the

road to achieve true mobility was not obvious. With the

evolution of the Uniform Accountancy Act (UAA), the path

became clearer. In November 2006, NASBA created the

CPA Mobility Task Force to pursue the implementation of

mobility in accordance with the revised UAA. At that time,

only the states of Ohio, Virginia, Wisconsin and Missouri had

implemented the mobility concept expressed in the UAA

provisions. While some states were trying to simplify their

procedures for granting reciprocal licenses, the new UAA

called for the CPA to have a single license with practice

privileges in other states and recognize the authority of each

state board where he or she practiced.

Since 2006, the mobility effort has continued to gain

momentum. By the end of 2007, 11 states had adopted

mobility through the provisions of Sections 7, 14 and 23 of

the UAA. This year saw 20 additional states having passed

mobility legislation for a total of 31 states. Fifteen states have

mobility bills written for filing in 2009 and the Mobility Task

Force is forecasting a total of 42 to 45 states by the of the

2009 legislative calendar.

”A true collaborative effort among the parties made the

difference in increased implementation efforts and

successes,” said Ken Bishop, NASBA Senior Vice President,

referring to the joint efforts of NASBA, the AICPA, CPA

Society Executives Association and the Accountants

Coalition. Resources have been devoted to Regional

CPA/SEA meetings, and presentations were made at NASBA

Regional Meetings to update the state boards on the

mobility legislation’s progress and inform members of the

vast array of resources available to them to help pass such

legislation. NASBA leadership has worked tirelessly, visiting

boards and presenting the UAA provisions as the right

solution to the issue of CPA mobility.

Most states have taken advantage of the legal services of

Gibson, Dunn & Crutcher LLP to assist with draft legislation

and/or legal reviews. “The assistance we received in

drafting the legislation was instrumental in its passage in the

state of New Mexico. I would encourage all boards to take

advantage of the many resources available,” asserted

Leonard Sanchez, New Mexico Board member.

On October 6, 2008, the U.S. Treasury Department’s Advisory

Committee on the Auditing Profession (ACAP) released its

final report. In the report, ACAP encouraged all states to


adopt the mobility provisions of the UAA by December 31,

2010. “In order for our capital market system to continue to

prosper and grow, NASBA recognized the need to ensure

that an efficient, effective mobility system is in place that will

allow CPAs and their firms, as professional service providers,

to serve the needs of American businesses, where ever they

are located,” testified NASBA President David Costello in a

written submission to ACAP. CPA practice mobility will allow

licensees to practice freely, but responsibly across state

borders while remaining accountable to the authority of

state boards of accountancy. State boards have answered

the call to fulfill their regulatory responsibility by adopting the

premise of “No notice, No fee and No escape.”

ALDThe Accountancy Licensee Database (ALD) began with

four states and today has 18 states contributing information

to the database. Nine additional states are committed to

participate this year, equaling 27 states in all.

Heralded as the gateway for Mobility, the ALD is a

centralized source of accurate and current information on

individual and firm licenses across the country. It will make

licensure, regulation and practice more efficient and

facilitate easy communication among boards, aid in the

state boards’ enforcement efforts and recognize

substantial equivalency.

The Treasury Department’s ACAP Committee saw the need

for such a system. In the final report, it recommended that

the states participate in NASBA’s Accountancy Licensee

Database (ALD) as a mechanism to assist in maintaining

appropriate oversight of CPAs throughout the country,

regardless of where they practice, and that appropriate

authorities interpret federal and state privacy regulations to

facilitate implementation of the ALD.

State boards understand the importance of the ALD and

how it will assist them in carrying out their responsibility for

public protection. “With the achievement of mobility, the

ALD is a vital tool for monitoring licensees throughout the

country. It only makes sense for every board of

accountancy to participate in the ALD,” said Nevada

Executive Director Viki Windfeldt.

The ALD Task Force, chaired by Nebraska Executive Director

Dan Sweetwood and NASBA staff have devoted the much

needed resources to assist boards with ALD participation.

“We have been readily available to assist all boards of

accountancy with any technical, legal or legislative issues,”

said NASBA Executive Vice President Joseph T. Cote. “The

task force maintains that there are no obstacles that cannot

be overcome to have every board participate.”

29


Pictured are state governors signing mobility legislationin the states of Kentucky, Washington and WestVirginia.

KentuckySeated: Governor Steve Beshear. Standing, left toright: Penny Gold, Lee Groza, Lindy Karns and RichardCarroll.

WashingtonSeated: Governor Christine Gregoire. Standing, left toright: Steve Conway, Tony Laliberte, Rich Jones, DianeBren, Ed Jolicoeur, Bea Nahon, Lisa Thatcher, TomSadler and Rick Sweeney

West VirginiaSeated: Governor Joe Manchin. Standing, left toright: Virgil Helton, Norman Mosrie, Louis Southworth,Pat Moyers, Jack Bodkin, David Hill and Jack Rossi.

November 2007After over two years ofcollaboration, study andreview, NASBA EducationCommittee releases exposuredraft of UAA ModelEducation Rules 5-1 and 5-2.

December 2007Former NASBA Director-at-Large,Charles H. Calhoun, III, beginsnew term on InternationalFederation of Accountants’International AccountingEducation Standards BoardConsultative Advisory Group.

January 2008

NASBA Regional Directors take on thechallenge of making implementationof the Accountancy LicenseeDatabase a top priority for all themember boards.

May 2008Representatives from 47 StateBoards attend NASBA’sConference on the State ofthe Examination, held inDallas, TX on May 19.

June 2008NASBA Eastern RegionalMeeting held June 11-13 inAsheville, NC, and NASBAWestern Regional Meetingheld in Newport Beach, CA,June 18-20. In total, 470people attended themeetings.

July 2008NASBA Board agrees to thedevelopment of a business plan fordelivery of the Uniform CPAExamination outside the UnitedStates.

February 2008The Department ofHousing and UrbanDevelopment proposesthe establishment of aroster of approvedindependent publicaccountants -- andNASBA responds.

March 2008The NASBA 26thAnnual Conference forExecutive Directorsand 13th AnnualConference for StateBoard Legal Counselare held in Austin, TX.Mobility was the mostfrequently addressedtopic.

April 2008

NASBA/AICPA International QualificationsAppraisal Board renews the tri-party mutualrecognition agreement with the CanadianInstitute of Chartered Accountants and theInstituto Mexicano de Contadores Públicosat signing ceremony attended by NASBABoard of Directors and dignitaries from threecountries.

August 2008NASBA and AICPAleaders holdsummit meeting inNew York City onAugust 8 andagree to continueto workcooperatively foradoption of UAASection 23legislation in allstates.

NASBA holdsfirst conferencefor State BoardPeer ReviewOversightCommitteemembers onSeptember 22in Nashville, TN.

September 2008 October 2008NASBA Center for the Public Trust co-sponsors a conference on “Developingand Sustaining an Ethical BusinessClimate” with the University of TexasMcCombs School of Business in Austin,TX, on October 16.

32

A Growing Myriad of RegulatoryRequirements

The U.S. state boards of accountancy, NASBA’s member

boards, represent more than 600,000 accountants in 55

jurisdictions, thereby collectively ranking them as the largest

accounting regulatory body in the world. It is essential that

this body, whose members are mandated to protect the

public interest, play a proportionate role in the deliberations,

debates and determinations that influence the

consideration and setting of international accounting

standards. To that end, it is incumbent upon NASBA to raise

our visibility in the international arena, to enlighten and

educate as to the roles we play in setting and enforcing

standards and to become a stronger influence in the field of

international regulation.

Most jurisdictions regulate the practice of accounting

through self-regulation, with or without an additional

umbrella of government oversight. The U.S. vests the

regulatory authority with the individual states but

superimposes a level of government oversight through the

SEC/PCAOB. Similarly, the EU/EC recognizes the regulatory

systems of individual member countries but superimposes an

EU-based regulatory system. Furthermore, professional

organizations participating as self-regulators in some

countries further increase the complexity of this system

through their programs and sub-organizations.

The increased mobility of the accounting profession subjects

accountants to a growing myriad of regulatory

requirements and standards. At the present time, the

International Accounting Standards Board (IASB) and the

International Federation of Accountants (IFAC) have

become the two primary international private-sector

standard-setters. The mutual goal is the development of a

common set of high quality global standards. With state

boards adopting FASB standards, the U.S. Financial

Accounting Standards Board (FASB) has been the primary

standard-setter in the U.S. FASB is subject to direct oversight

by the SEC; however, there is no similar governmental

oversight of the IASB. Also, FASB is financed entirely by the

fees from SEC registrants as established by the Sarbanes-

Oxley Act as opposed to 35% of the IASB funding being

provided annually by the Big Four accounting firms.

As we move forward in this brave new world, the first

challenge is to raise our profile and significance in the eyes

of the statutory regulators in the international arena. We

should begin to lay the groundwork for the process of

changing their understanding of the roles of the state

boards of accountancy. With that plan in motion during

2007-2008, NASBA introduced the Forum of International

Accountancy Regulators in Boston, Massachusetts; the

establishment of a new NASBA committee, to analyze

strategic elements of an international accountancy

regulatory system; and the creation of a professional staff

position (Director, Governmental, International and

Professional Relationships) within NASBA to assist with the

cultivation of meaningful international relationships.


Understanding the current regulatory structures that

influence financial activities throughout the world is a

necessary component of building a system which protects

the global public interest. Challenges facing regulators

range from the impact of adopting International Financial

Reporting Standards (IFRS), to the complexities of disciplining

accountants from other jurisdictions, to gaining perspective

on the dilemmas facing regulators throughout the world.

On October 28-30, 2008, international accounting and

auditing regulators will join together to discuss constructing

an effective system of regulation and enforcement. The

Forum of International Accountancy Regulators will feature

formal presentations, breakout sessions and networking

opportunities.

Based on what is learned at the forum, NASBA intends to

begin a journey towards unifying the voice of accountancy

regulators from around the world and developing an

alliance that will provide significant influence on ethics,

professional practice and consumer confidence in the

global practice of accounting.

Indirect reference to IASB -

57%

Direct reference to IASB -

4%

Unsure of status - 22%

33


FORUM PARTICIPANTS

AustraliaBermudaCanadaDenmarkFranceGermany

Hong KongIrelandChinaMexicoNew ZealandPoland

ScotlandUnitedKingdomUnited States

The chart above reflects that a majority of states currentlyreference the AICPA Code of Professional Conduct instate law/rules and, consequently, as of May 18, 2008,accept the IASB as a recognized standard setter forfinancial accounting and reporting principles.

34


Being a Difference

The NASBA Center for the Public Trust (CPT) continued onthe road to success during the 2007-2008 fiscal year. CPTimplemented a new program of presenting the Being aDifference Awards to recipients in their respectivecommunities. The goal of this program is to provide family,friends and colleagues of the recipients an opportunity toshare and participate in the award presentation. TheAwards honor those practicing high standards of socialresponsibility and ethical leadership. Recipients do notsimply aspire to make a difference: They are a difference intheir circumstances by embodying the very best inprincipled behavior in the face of difficult challenges. Bydemonstrating innovative responses to ethical challenges,communities and individuals are inspired and motivated toemulate similar behavior.

During 2007-2008, CPT bestowed three awards in New York,NY, Nashville, TN and Durham, NC.

TAMMY MORREALEIn 2006, PwC instituted a month-long focuson community service. Ms. Morreale leadthe effort, called 29k/30, which represented29,000 people volunteering over a 30-dayperiod. She directs and implements these

programs and serves as a spokesperson for ethics andcorporate responsibility. The program has now evolved into1*/30,000, representing the idea that one individual canmake a difference, but 30,000 people, working as a team,can inspire change. Expecting twins, Ms. Morreale traveled

from Florida to receive the CPT Being a Difference Awardon November 6, 2007 at the PricewaterhouseCoopersheadquarters in mid-town Manhattan.

RICHARD COWART, ESQ.Mr. Cowart is the head of the Health/PublicPolicy Department and a member of theBoard of Directors of Baker, Donelson,Bearman, Caldwell & Berkowitz, PC. Mr.Cowart is regarded by his colleagues as the

ethical rudder of his firm and under his leadership, the firmhas responded to national crises, such as Hurricane Katrina.He received his award at the offices of Baker Donelson onFebruary 13, 2008. More than 80 friends, family and businessassociates attended this event held in Nashville, TN.

NATHAN GARRETT CPA, ESQ.Mr. Garrett, CPA, attorney and educator,has served as president of NASBA, Chair ofthe board of North Carolina Mutual LifeInsurance Company, Chair of the board oftrustees of Fayetteville State University and

as a trustee of Duke University. A past chair of NASBA, Mr.Garrett has played a vital role in the Civil Rights Movementand has affected change in the hiring and advancement ofminorities. Surrounded by more than 100 friends, familymembers, NASBA activists and business associates, Mr.Garrett received his award on May 13, 2008 at the offices ofthe North Carolina Mutual Life Insurance Company inDurham, NC.

EXPANDING COMMUNICATIONSIn the summer of 2008, the CPT distributed its first issue of aquarterly newsletter, Ethics Matters (EM). Along withproviding an update on the CPT’s activities, EM also featuresan article on ethics reprinted from an outside source andhighlights “Good News” stories.

October 2008 also welcomed the launch of the new CPTWeb site. Redesigned to improve functionality, the sitefeatures a new look and many more tabs to allow usersadditional facility in navigating the information provided.

Programs &The high road to service is traveled with integri

and understanding. People don t care how much w

until they know how much we care.

- Unknown

36

Programs and Services

NASBA’s flagship program, CPA Examination Services (CPAES), provides boards of

accountancy with a comprehensive array of services related to the Uniform CPA

Examination. A few of these services include application processing, credential evaluations

and score reporting. Outsourcing these services to the experienced professionals at NASBA

enables boards of accountancy to provide their candidates with a positive examination

experience while remaining focused on enforcement and other critical functions.

The National Candidate Database (Gateway) is a database of CPA candidate information created to help boards of

accountancy protect the personal data provided by candidates during the application and examination processes. As

a central repository for all CPA Examination candidate information, the Gateway acts as a national tracking system for CPA

Examination candidates. With the ability to track a candidate’s history, from initial application to grading of the

examination, the Gateway is a powerful tool for managing testing information.

NASBA’s Guam Computer Testing Center administers the CPA Examination and other miscellaneous exams including

admissions exams, certification exams and the GRE to international candidates (primarily from Japan and Korea). Because

of the center’s prime location, international candidates travel to it to take these exams.

Celebrating yet another year of achievement, NASBA continues to provide benefits to member boards through its array of

programs and services. New programs were launched and old programs were retooled resulting in a wide range of

offerings for member boards, CPA Examination candidates, the accounting profession and the public.

2008 NASBA Annual Report2008 NASBA Annual Report

� INTERNATIONAL QUALIFICATION EXAMINATIONCPAES offers the International Qualification Examination (IQEX) to qualifying candidates

each year. The purpose of IQEX is to facilitate the U.S. CPA qualification process for

accounting professionals from other countries whose professional bodies have entered

into mutual recognition agreements with NASBA and the American Institute of Certified

Public Accountants (AICPA). These agreements are recommended to the states for their

adoption. Agreements have been established with the Canadian Institute of Chartered

Accountants, Instituto Mexicano de Contadores Publicos, Institute of Chartered

Accountants in Australia, CPA Australia and the Institute of Chartered Accountants in

Ireland.

� CPA EXAMINATION SERVICES

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� PROFESSIONAL CREDENTIAL SERVICES, INC. (PCS)

COSMETOLOGYPCS partners with the National-Interstate Council of State Boards of

Cosmetology, Inc. (NIC) to provide examination, certification and licensure

services to state boards of cosmetology and barbering. As a partner of NIC,

PCS enjoys the unique position to offer these services to all boards of

cosmetology and barbering with a personal knowledge of the profession. Some

of the services provided are application processing, examination administration and test development. Outsourcing

these services to PCS allows state boards to provide their candidates with a positive examination experience while

remaining focused on other critical functions.

ENGINEERING PCS provides examination and licensing services to state boards of engineers and land surveyors. These services include

application processing, eligibility processing, paper/pencil examination administration, score reporting and licensing.

TEST DEVELOPMENT Test development is a service provided by PCS that helps clients develop examinations by providing task and question

analysis, writing examination questions, assembling the test, etc. Test development is a complex service requiring

extensive knowledge of testing standards.

MISCELLANEOUS EXAMSPCS contracts include a variety of miscellaneous exams for which it provides examination and licensing services including

application processing, eligibility processing, paper/pencil examination administration, score reporting and licensing.

� WALL CERTIFICATE SERVICENASBA’s Wall Certificate Service is designed to enhance the quality of licensing

certificates of professional and licensing agencies by offering creative and

professional design options. Offering superior custom design, production and

processing, this service efficiently produces professional wall certificates state board

members can be proud to present. Other options include state-of-the-art printing,

custom framing and distribution.

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Through the combined efforts of NASBA departments, the idea of a comprehensive Web site to cross-reference new and

existing NASBA services evolved into a new approach for connecting NASBA with both its member boards and the

professionals they license. Since the launch of NASBAtools.com, the site has received the Web Star of the Week award

from WebCPA. NASBAtools incorporates services into three main areas: Licensure, CPE Compliance and CPE Sponsors.


� ACCOUNTANCY LICENSING LIBRARY (ALL)The Accountancy Licensing Library (ALL) is an online resource that provides regularly-updated, reliable CPA licensing

information for all 55 state boards of accountancy. ALL allows state boards, candidates, licensees and firms to gather

comprehendible CPA licensing information from one place. Some of ALL’s features include up-to-date licensing

requirements, step-by-step licensing instructions and procedures, official state board forms converted into writable format,

email alerts of regulatory changes and a research tool for narrowing search criteria.

� ACCOUNTANCY LICENSEE DATABASE(ALD)The Accountancy Licensee Database (ALD) is a database of licensee information provided by boards of accountancy.

ALD serves as a centralized repository of licensee information on CPAs and firms, and simplifies the licensure verification

process.

� LICENSURE SERVICESNASBA’s licensing programs comprise a suite of à la carte services provided to state boards of accountancy and other

professions working with PCS. These programs include application processing, eligibility determination, score reporting,

education evaluations, etc. By outsourcing these services to NASBA, state boards are able to provide their applicants

and licensees with a positive licensing experience while remaining focused on enforcement and other critical regulatory

functions.

NASBAtools

� CREDENTIALNETCredentialNet is an evaluation service provided by NASBA to boards of accountancy. This service involves evaluating the

education, experience and examination results of a candidate or licensee against the Uniform Accountancy Act’s

requirements and other regulations as requested by a board of accountancy. Many boards of accountancy use this

service to assist with evaluations for reciprocity and/or granting temporary licenses/permits. With the recent surge in the

adoption of mobility legislation by numerous states, CredentialNet is poised to provide individual substantial equivalency

evaluations for practitioners nationwide.

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� NATIONAL REGISTRY OF CPE SPONSORS & QUALITY ASSURANCE SERVICE (QAS)The National Registry of CPE Sponsors (Registry) and Quality Assurance Service (QAS) programs recognize and highlight

continuing professional education (CPE) sponsors that provide CPE programs in accordance with nationally recognized

standards developed jointly by NASBA, boards of accountancy and the AICPA. Because of the respected standards and

processes for approval, many boards and associations accept CPE course credits earned from Registry and/or QAS

sponsors, while some boards will only accept credits granted by Registry and/or QAS sponsors.

� CPEMARKETCPEmarket is a convenient online tool that allows CPAs and other professionals to quickly and easily search for continuing

education credits that meet the requirements to maintain and/or renew professional licenses. This database boasts

more than 4,000 CPE courses searchable by keyword, date, location, credits and more. In addition, state CPE

requirements are provided including renewal date, reporting period, required hours, credit limits, state policies, etc.

Participating providers of course information include Registry and QAS sponsors, other CPE course providers and Pilot

Test (free CPE) course providers.

� CPETRACKINGCPEtracking is a robust online system that help boards of accountancy, individuals and firms manage CPE compliance.

CPEtracking maintains CPE credit information entered by the subscriber or firm and compares that information with

current requirements of state boards of accountancy and other organizations (such as the AICPA). The user is then able

to view his/her compliance status at-a-glance and generate compliance reports to send directly to a reporting agency.

� NASBA CENTER FOR THE PUBLIC TRUSTThree outstanding educational events were co-sponsoredby the NASBA Center for the Public Trust (CPT) during the2007-2008 year. New York, NY, Nashville, TN, and Austin, TXwere the conference city hosts where more than 500participants earned CPE credit.

“Ensuring Integrity: The Second Annual Ethics Conference”was co-sponsored by CPT and the Baruch College RobertZicklin Institute for Corporate Integrity. Held on December 6,2007, at the Baruch Campus in New York City,approximately 200 individuals attended the conference.With representatives from the SEC, PCAOB, AuditingStandards Board and individuals from large and mid-sizedfirms as speakers, a comprehensive overview was providedand topics such as International Financial ReportingStandards (as published by the International Auditing andAssurance Standards Board), globalization and standardsfor smaller audits were discussed. “Trust in the U.S. financialsystem relies on auditors,” said Larry Bridgesmith, CPT Boardmember, in summarizing the conference. “Culture is whatwe tolerate as professionals,” he observed. “We can makea difference by being a difference.”

On February 1, 2008, the “CEO Leadership” Forum co-hosted by the CPT and the Vanderbilt Owen GraduateSchool of Management provided insight into methods usedby ethical leaders to promote a principled work place.Nationally known moderator Jack Faris led three high-powered panelists through a thought-provoking dialogue.As questions from the audience were discussed, onecommon theme emerged: Ethical reactions to informaldecisions are absorbed by those around you all of thetime—by your children, co-workers and staff. Ethicaldiscussions and behaviors are not just for formal educationand major decisions, but a way of life. As Cordia Harrington,CEO of the TN Bun Company, noted, “How do you knowyou’re winning, if you’re not playing by the rules?”

The NASBA CPT, University of Texas at Austin McCombsSchool of Business and the Society of CorporateCompliance and Ethics co-sponsored “Developing andSustaining an Ethical Business Culture” on October 16, 2008.Developed to help participants know the right steps toensure their companies are conducting business in the mostethical manner, the conference featured speaker wasCynthia Cooper, author of the best-selling book, TheJourney of a Corporate Whistleblower—ExtraordinaryCircumstances. Ms. Cooper shared her account of howshe and her team identified the corporate fraud atWorldCom.

FOUNDING MEMBERSHIPCPT announced the close of its Founding Members programin 2008. This is a unique opportunity for individuals to supportthe important work of CPT. Founding membership will beavailable until the end of 2008; yet those who becomeFounding Members will remain in this special category andwill always be recognized as early supporters. FoundingMembers are listed on the CPT Web site. To furtherrecognize this special group, a “Founding Member,” pin wascreated. The Founding Member pin will be sent to all whodonate during our Founding Member Campaign and thosewho have already become Founding Members.

TRUST SOCIETYThe Trust Society is a group of industry-leading companies,organizations and institutions. Trust Society Members havecommitted to supporting the activities of the CPT.

Through their involvement in CPT:

• Trust Society Members are recognized globally as leaders in business ethics and ethical leadership

• Trust Society Members help raise the standard of ethical behavior of businesses globally

• Trust Society Members increase the understanding and use of ethical business practices within their companies

• Trust Society Members are part of a network of industry-leading companies, organizations and institutions

• Trust Society Members help restore the hope, confidence and trust the public has in business today

SunTrust Banks, Inc., headquartered in Atlanta, Georgia, wasthe first Trust Society member. SunTrust is one of the nation'slargest banking organizations, serving a broad range ofconsumer, commercial, corporate and institutional clients.The company operates an extensive distribution networkprimarily in Florida, Georgia, Maryland, North Carolina, SouthCarolina, Tennessee, Virginia and the District of Columbia.The Accountants Coalition, an organization comprised ofrepresentatives of the big four accounting firms whichfocuses on major legislative and regulatory projects andMoss Adams LLP, the 12th largest accounting and consultingfirm in the United States and the largest firm headquarteredin the West, are also Trust Society members.

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FinancialIt is a rough road that leads to heights of g

- Seneca

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National Association of State Boards of Accountancy, Inc.And Related Organizations

Consolidated Financial Statements

July 31, 2008 and 2007

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REPORT OF PRESIDENT AND CHIEF EXECUTIVE OFFICER September 23, 2008AND OF CHIEF FINANCIAL OFFICER

We, David A. Costello, CPA, President and Chief Executive Officer and Michael R. Bryant, CPA, ChiefFinancial Officer, of the National Association of State Boards of Accountancy, Inc. (“NASBA”), jointlyand severally, do hereby state and attest that:

To the best of our knowledge and belief, based upon a review of the Consolidated FinancialStatements of the National Association of State Boards of Accountancy, Inc. and RelatedOrganizations at and for the years ended July 31, 2008 and 2007, including the Notes thereto, asreported on by NASBA’s independent auditors, Lattimore Black Morgan & Cain, PC, such financialstatements do not contain an untrue statement of a material fact as of the date hereof nor do suchfinancial statements fail to state a material fact necessary to make the financial statements, in lightof the circumstances under which they were prepared, not misleading.

We have reviewed the contents of this statement with the Chairman of the Audit Committee ofNASBA.

National Association of State Boards of Accountancy

150 Fourth Avenue North � Suite 700 � Nashville, TN 37219-2417 � Tel 615/880-4200 � Fax: 615/880-4290 � Web www.nasba.org

David A. Costello, CPAPresident and Chief Executive Officer

Michael R. Bryant, CPAChief Financial Officer

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REPORT OF MANAGEMENT September 23, 2008

The management of the National Association of State Boards of Accountancy, Inc. and RelatedOrganizations is responsible for the preparation, integrity and objectivity of the consolidated financialstatements included in this annual report. These consolidated financial statements have beenprepared in accordance with accounting principles generally accepted in the United States ofAmerica applied on a consistent basis and are considered to present fairly in all material respects theAssociation’s financial position, changes in net assets and cash flows.

Management has established and maintains internal controls designed to give reasonable assuranceof the integrity and objectivity of financial reporting, that assets are safeguarded, and thattransactions are executed in accordance with appropriate authorizations and recorded properly.Internal controls include the careful selection of employees and members of the management team,the proper segregation of duties, and the communication and application of formal policies andprocedures that are consistent with high standards of accounting and administrative practices. Theconcept of reasonable assurance is based on the premise that the cost of internal controls should notexceed the benefits derived.

The Board of Directors, through its Audit and Administration and Finance Committees, reviewsfinancial and accounting policies, practices and reports, and monitors the system of accounting andinternal controls and the competence of persons performing those functions. The Audit Committeealso oversees the scope and results of independent audits and any comments on the adequacy ofinternal controls and quality of financial reporting. The independent auditors render an objective,independent opinion on management's financial statements, and have direct access to the AuditCommittee with and without the presence of management.

The Board of Directors also has adopted and monitors personnel policies designed to ensure thatemployees of the National Association of State Boards of Accountancy, Inc. and RelatedOrganizations are free of any conflicts of interest.



David A. Costello, CPAPresident and Chief Executive Officer

Michael R. Bryant, CPAChief Financial Officer

Joseph T. Cote, CPAChief Operating Officer

Troy A. Walker, CPAController

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REPORT OF AUDIT COMMITTEE September 23, 2008

The Board of Directors and MembersNational Association of State Boards of Accountancy, Inc.

The Audit Committee (the “Committee”) of the National Association of State Boards of Accountancy,Inc. for the year ended July 31, 2008, was charged by the Board of Directors with the responsibility foroversight of the annual independent audit of the consolidated financial statements.

In connection with the discharge of its responsibility,

• Prior to commencement of the year-end audit work, the Committee met via teleconference with the independent auditors to discuss (1) the overall scope and specific plans for the conduct of the audit and (2) the accounting, reporting and internal control processes and procedures of the National Association of State Boards of Accountancy, Inc., including the safeguarding of assets and other resources against unauthorized acquisition, use or disposition;

• After the completion of the audit, the Committee, along with members of senior management, met with the independent auditors to discuss the results of the audit and, without senior management present, the Committee had an opportunity to discuss privately with the independent auditors any matters of concern of the independent auditors;

• The Committee met privately to discuss and consider the credentials and performance of the independent auditors and decided on a recommendation to the Board of Directors of an independent audit firm for the year ending July 31, 2009.

Based on the above, the Committee believes that the annual independent audit was properlycompleted, and that management has maintained adequate systems and controls and followed theappropriate procedures related to financial accounting, reporting and safeguarding of assets forthe year ended July 31, 2008.

Respectfully submitted,

The Audit CommitteeNational Association of State Boards of Accountancy, Inc.

Harris W. Widmer, CPA, Chair, on behalf of the Members of the Committee as follows:David P. Kassouf, CPAJoe C. Lawrence, CPARebecca L. Phillips, CPA



INDEPENDENT AUDITORS’ REPORT

The Board of Directors and MembersNational Association of State Boards of Accountancy, Inc.

We have audited the accompanying consolidated statements of financial position of the NationalAssociation of State Boards of Accountancy, Inc. and Related Organizations as of July 31, 2008 and 2007,and the related consolidated statements of activities, program expenses and cash flows for the years thenended. These consolidated financial statements are the responsibility of management. Our responsibility isto express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audits to obtain reasonable assuranceabout whether the consolidated financial statements are free of material misstatement. An audit includesconsideration of internal control over financial reporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe internal control over financial reporting. Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financialstatements, assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,the financial position of the National Association of State Boards of Accountancy, Inc. and RelatedOrganizations as of July 31, 2008 and 2007, and the changes in their net assets and their cash flows for theyears then ended in conformity with accounting principles generally accepted in the United States ofAmerica.

Brentwood, TennesseeSeptember 23, 2008

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Be the change you want the world to see.- Gandhi

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