Professional Issues Tracker
Welcome to the PIT
The Professional Issues Tracker keeps you informed of the legislation, testimony, statements, and thought leadership the PICPA is providing on behalf of all Pennsylvania CPAs and the accounting profession.
This is how we build a better profession.
We are currently tracking 20 issues relevant to the accounting profession.
We are spearheading change to ensure a solid future.
Challenges Facing the CPA Profession
Credit requirements, testing, and awareness of the profession affect the future of accounting.
Press Releases
Charitable Giving Bill
The issue
State Reps. Abigail Salisbury (D-Allegheny) and Keith Greiner, CPA (R-Lancaster), introduced legislation supported by the PICPA that would raise the monetary threshold that subjects charitable organizations to more extensive financial oversight, including mandatory audits. Under House Bill 1824, charitable organizations receiving annual contributions of $1 million or more (currently $750,000) would be required to have an audit. Those receiving contributions of less than $1 million would have different levels of review or compilation required on their financial statements to be performed by an independent CPA.
Our position
The PICPA believes this legislation will benefit many not-for-profit organizations while also relieving human capital pressures in the CPA community.
Status: House Bill 1824 is pending in the House State Government Committee. Memo.
Reviewed July 2024
Tax Appeal Reform
The issue
State Sen. Scott Hutchinson (R-Venango) and Rep. Tim Briggs (D-Montgomery) introduced Senate Bill 1051 and House Bill 1994, respectively, legislation backed by the PICPA that would streamline the process of resolving disputes with the Department of Revenue (DOR). The proposed legislation would permit the Board of Finance and Revenue (BF&R), which hears and resolves appeals of final decisions from the DOR that involve most types of tax disputes, to consider late-filed tax appeals from the DOR and create a settlement process for taxpayers as an alternative to the formal and lengthy court appeals process.
Our position
This legislation would empower BF&R to direct and oversee a formal settlement process for any tax appeal that would benefit from this procedure. This taxpayer-friendly solution also benefits Pennsylvania by resolving tax issues sooner, collecting tax liabilities quicker, and directing resources toward more complex cases.
Status: Senate Bill 1051 was passed by the Senate on June 4, 2024 and moves to the House Finance Committee for consideration. Memo. House Bill 1994 is pending in the House Finance Committee. Memo
Reviewed July 2024
Corrective Legislation for Intangible Expense Addback Credit
The issue
Pennsylvania’s corporate net income tax (CNIT) law requires certain intangible expenses or costs to be added back when paid to an affiliate. When the affiliate is also subject to income tax (in Pennsylvania or elsewhere), a credit is currently allowed. This credit is calculated using the taxpayer’s CNIT apportionment and it has the potential to be applied in a manner that results in double taxation. This situation is exacerbated by the establishment of an economic nexus standard and a change to market-based sourcing of intangibles pursuant to Act 53 of 2022. Effective beginning with the 2023 tax year, these changes are expected to significantly increase the number of affiliates subject to CNIT.
Our position
The PICPA State Tax Steering Committee initiated corrective legislation introduced by Rep. George Dunbar, CPA-Inactive - House Bill 2422 - to replace the current inequitable credit mechanism with a simpler deduction that avoids unnecessary complexity and relieves double taxation. This legislation will allow an affiliate that is subject to CNIT a deduction equivalent to the intangible expenses or costs added back under the current law.
Status: The language similar to that found in House Bill 2422 made it into the final tax bill (Senate Bill 654) which passed as part of the state budget agreement and it allows an affiliate subject to the CNIT a deduction equivalent to the intangible expenses or costs, or interest expense or cost, to be added back. This provision is in effect for taxable years after Dec. 31, 2022.
Reviewed July 2024
Optional Entity-Level SALT Cap Workaround
The issue
The federal Tax Cuts and Jobs Act (TCJA) of 2017 imposes a $10,000 limitation on the deduction individual taxpayers may claim for state and local taxes paid for tax years 2018-2025 (SALT cap). This limitation presents challenges for taxpayers, particularly owners and shareholders of businesses structured as partnerships or S corporations. Income generated from the activities of these pass-through entities is currently taxed at the owner level at Pennsylvania’s 3.07% personal income tax rate.
Our position
The PICPA is urging state lawmakers to adopt legislation that provides a revenue-neutral elective pass-through entity tax (PTET) to allow tax to be paid at the entity level and facilitate the federal deductibility of state income taxes. In doing so, Pennsylvania will better align with those states that have already enacted similar legislation to provide their constituents with a path to an increased federal tax deduction. To date, 36 of the 41 states imposing a personal income tax have passed similar legislation. The PICPA supports Senate Bill 659 (Sen. Aument) and House Bill 1584 (Reps. Pisciottano/Greiner).
Status: Senate Bill 659 was approved by the Senate Finance Committee on March 20 and is currently in the Appropriations Committee. Memo.
House Bill 1584 is pending in the House Finance Committee. Memo.
Reviewed July 2024
Resident Partner Credit
The issue
Pennsylvania resident partners who are subject to a PTET in other jurisdictions may incur a double tax based on the denial of a Pennsylvania resident credit, even though the same amount of tax is being paid to the other states through the PTET as was paid directly by Pennsylvania residents. The Pennsylvania DOR has articulated its position that a Pennsylvania resident partner is not entitled to a credit against personal income tax for PTET paid to other states. This contrasts with the DOR’s position that a Pennsylvania resident S corporation shareholder is eligible for a similar personal income tax credit.
Our position
The PICPA supports Senate Bill 660 (Aument) and House Bill 1584 (Pisciottano/Greiner) as legislation that would allow the same credits for resident partners and S corporation shareholders, alleviating this potential for double taxation.
Status: Senate Bill 660 is pending in the Senate Finance Committee. Memo.
House Bill 1584 is pending in the House Finance Committee. Memo.
Reviewed July 2024
E-Filing Local Tax Reform
The issue
In the interest of simplifying local taxes from the standpoint of Pennsylvania's taxpayers and tax preparation practitioners, the PICPA is urging the state General Assembly to allow the electronic filing of local earned income tax returns. This will help modernize local tax filing while leveraging existing systems and processes to hold down costs and other impacts. Modernized e-File (MeF) is a federal program run by the IRS that allows taxpayers and professionals to electronically submit a tax return directly to the IRS and state tax authorities. Forms are converted to a digital layout that tax preparation programs transmit to the federal authority, which in turn transmits the state information directly to state tax authorities.
Our position
Currently, taxpayers can file electronically using the MeF system for their federal and state tax returns. The reforms would incorporate this same process for local earned income taxes.
Status: Representatives from the PICPA had a meeting with Rep. Bob Freeman, chairman of the local government committee in the House, on Dec. 20, 2023, followed by a call with members of the local government Commission in Harrisburg to discuss this issue. Our proposal was well received.
Reviewed July 2024
A&A
PCAOB Proposed Rule on NOCLAR
The issue
The Public Company Accounting Oversight Board's (PCAOB) noncompliance with laws and regulations (NOCLAR) proposal would fundamentally change the nature and scope of the audit by proposing to change the auditor’s responsibility for identifying noncompliance with laws and regulations. These responsibilities would be greatly expanded to include those agencies having an indirect impact on the financial statements or operational compliance such as EPA, OSHA, FDIC, FDA, FCPA, AML on privacy laws, tax laws, and consumer protection laws.
Our position
The PICPA is vigorously advocating against the untenable expansion of the scope of the audit proposed by the PCAOB. Legislative outreach efforts are in progress. PICPA members are strongly encouraged to reach out to their state congressional representatives — U.S. Reps. Mike Kelley, Matt Cartwright, Brian Fitzpatrick, and U.S. Sen. John Fetterman — to make them aware of this significant issue.
Status: The PCAOB issued additional questions in connection with roundtable discussions and additional comments were due March 18, 2024, with the PCAOB's review subsequent to the close of the comment period. The PICPA issued a comment letter on March 18 and followed up with an email to U.S. House Financial Services Committee members on June 18, 2024.
- PICPA Comment Letter on PCAOB Rulemaking Docket Matter No. 051 - March 18, 2024
- Email to U.S. House Financial Services Committee members RE: PCAOB Proposal - Noncompliance with Laws and Regulations (NOCLAR) - June 18, 2024
Reviewed July 2024
Firm Reporting and Engagement Metrics
The issue
The Public Company Accounting Oversight Board (PCAOB) issued two proposals that would greatly increase the information firms would be required to report externally, including more detailed fee information, financial and operational information, policies and procedures that relate to engagements for private company audit clients and for nonaudit services, cybersecurity policies and procedures, a vague and all-encompassing incident report requirement, details on firm governance and structure and the process for making changes to that structure, and a summary description of the firm’s policies and procedures, even for inactive firms. The largest firms also would be required to provide U.S. GAAP financial statements. Many of these proposed requirements would include information related to private company audits and services for nonattest clients, which we believe is outside of the PCAOB’s statutory authority. Proposed engagement and firm metrics include information on time reporting (e.g., average hours worked by partners each quarter), experience of personnel, retention rates, hours spent by senior level professionals on material audit areas, results of internal inspections, restatements, the use of specialists and shared-service centers, etc.
Our position
The PICPA is concerned regarding the magnitude and granularity of the proposed requirements. The costs of compliance would be astronomical and would not contribute to improving audit quality. Instead, they would further strain the pipeline and challenge the already constrained talent pipeline. The PICPA also argued that investors would not have sufficient context to understand many of the proposed metrics, including the results of a firm’s internal inspection findings. While the PCAOB’s proposal is predicated upon the need to provide investors with additional information to assist in their ratification of the auditor, in many cases investor votes on ratification are nonbinding. We believe that audit committees already access much of this information, and this required reporting disintermediates the role of the audit committees.
Status: The PICPA issued comment letters in June 2024.
- PICPA Comment Letter on PCAOB Rulemaking Docket Matter No. 041 - June 7, 2024
- PICPA Comment Letter on PCAOB Rulemaking Docket Matter No. 055 - June 7, 2024
Reviewed July 2024
Audit Quality and Standards
The issue
The AICPA Code of Professional Conduct requires practitioners to maintain a high level of practice excellence. This is an ongoing challenge.
Our position
We support high and consistent audit quality and rigorous standards that support high audit quality. To raise awareness of the need to maintain high audit quality, the PICPA has hosted a town hall on the AICPA’s Quality Management Standards and the results of the DOL Audit Quality study, and are working on additional education highlighting performance challenges. We are also monitoring the AICPA projects on standards revisions related to fraud that are intended to improve audit quality.
Status: The PICPA issued a comment letter on June 5, 2024.
Reviewed July 2024
Input on the Private Company Counsel
The issue
The Financial Accounting Foundation requested input on the Private Company Counsel (PCC). Specific questions included the effectiveness of the PCC, potential areas of improvements, whether the PCC has been successful in proposing alternatives within GAAP that address the needs of users of private company financial statements, whether the FASB has been appropriately responsive to the needs of private companies and the recommendations from the PCC, whether changes to the standard-setting process for private companies are warranted, and suggestions about changes to the size, composition, term length, or responsibilities of the PCC.
Our position
The PICPA acknowledges that a number of significant changes were made when the PCC was first established, but we believe improvements are needed to ensure that the PCC represents the financial reporting needs of smaller organizations. Our response noted that many privately held entities have switched their financial reporting framework to alternative special purpose frameworks other than U.S. GAAP due to cost considerations. However, this use of special purpose financial reporting frameworks is not in the public interest since many are not sufficiently robust (e.g., tax basis) to appropriately present an organization’s financial performance and others (e.g., special purpose framework for small to medium sized entities) are not commonly accepted. The PICPA believes that improvements can be made to the PCC to ensure that the needs of privately held entities are timely met.
Status: The PICPA issued a comment letter on May 31, 2024.
Reviewed July 2024
Quality Control Standards
The issue
On May 13, 2024, the Public Company Accounting and Oversight Board adopted A Firm's System of Quality Control and Other Amendments to PCAOB Standards, Rules, and Forms. The PCAOB adopted a standard that it believes will lead registered public accounting firms to significantly improve their Quality Control (QC) systems. An effective QC system protects investors by facilitating the consistent preparation and issuance of informative, accurate, independent, and compliant engagement reports. Properly conducted audits and other engagements enhance the confidence of investors and other market participants in the information firms report on.
Our position
We support rigorous audit quality and the modernization of audit standards that will achieve that end. Thus, we believe that the proposed standards should be weighed against the overall objective of improving audit quality and the expected costs. We are concerned that this proposal will not improve audit quality, but instead will reduce competition, increase audit fees, and introduce conflicts with international standards.
Status: The PICPA issued a comment letter to the U.S. Securities and Exchange Commission on June 24, 2024.
Reviewed July 2024
Ethics
Tax Planning and Related Services
The issue
The International Ethics Standards Board for Accountants (IESBA) proposed revisions to the Code of Professional Conduct (the Code) are intended to develop a principles-based framework, leveraging the fundamental principles and the conceptual framework of the Code to guide practitioners when providing tax planning and related services to clients or performing tax planning activities for employing organizations.
Our position
The PICPA has significant concerns regarding this far-reaching proposal that would potentially conflict with authoritative tax regulations, expose tax practitioners to additional legal liability, and require accountants to factor stakeholder perceptions into their proposed tax planning services. The adoption of these aggressive tax standards could jeopardize the use of the CPA credential for tax planning services.
Status: The PICPA issued a comment letter on June 29, 2024.
- PICPA Comment Letter on Consultation Plan, Proposed IESBA Strategy and Work Plan, 2024-2027 - June 29, 2023
Reviewed July 2024
Using the Work of an External Expert
The issue
The Exposure Draft on Using the Work of an External Expert proposes an ethical framework to guide professional accountants or sustainability assurance practitioners, as applicable, in evaluating whether an external expert has the necessary competence, capabilities and objectivity in order to use that expert’s work for the intended purposes. The proposals also include provisions to aid in applying the Code of Professional Conduct’s conceptual framework when using the work of an external expert.
Our position
The PICPA supports the International Ethics Standards Board for Accountants' (IESBA) efforts to ensure that public accountants use external experts who are objective and competent and agrees with the decision not to require all external experts to be independent. However, we believe that the proposed Section 5390 on using the work of an external expert for sustainability assurance providers should be considered holistically in connection with the Proposed International Ethics Standards for Sustainability Assurance (discussed below).
Status: The PICPA issued a comment letter on April 30, 2024.
- PICPA Comment Letter on Using the Work of an External Expert - April 30, 2024
Reviewed July 2024
IESBA - Ethics Standards for Sustainability Assurance
The issue
The International Ethics Standards Board for Accountants (IESBA) approved the proposed new International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and proposed Revisions to the International Code of Ethics for Professional Accountants (the Code) on Sustainability Reporting. The Exposure Draft contains proposed independence standards for use by all sustainability assurance practitioners regardless of whether they are professional accountants, and specific ethics provisions relevant to sustainability reporting and assurance.
Our position
The PICPA supports the IESBA’s efforts to develop ethics standards applicable to practitioners performing sustainability assurance engagements. Fundamentally, the PICPA has concerns with the broader effort to develop profession-agnostic standards without evaluating how the standards work together with education, training, peer review, licensure, regulatory, and enforcement mechanisms similar to those of public accountants.
Status: The PICPA issued a comment letter on May 10, 2024.
Reviewed July 2024
CPA Exam Window Extension
The issue
To increase the accounting pipeline capacity and remove further barriers to entry within the industry, it's important to rethink the 18-month window to pass all parts of the CPA Exam.
Our position
The PICPA supports extending the exam window from 18 to 30 months. In addition to our support of reinstating credits for exams lost during the pandemic, the PICPA has encouraged the State Board to adopt the new suggested window of time for future candidates to complete their exam.
Status: Approved
Update: Regulations are unlikely to be adopted until 2025, and the PICPA is continuing to work with stakeholders and policy makers on this issue. We encourage any candidates who currently meet the requirements to continue to apply for extensions as needed.
A Win for the Profession: The Importance of NASBA's CPA Exam Window Extension
by PICPA CEO Jennifer Cryder, CPA, MBA
NASBA approves one-year extension to CPA Exam window
Journal of Accountancy
Reviewed June 2024
Work and Learn
The issue
According to research conducted by the Center for Audit Quality (CAQ) and PICPA, the significant time and cost associated with the pursuit of 150 credit hours of education in order to get the CPA license is a barrier for those considering a career in accounting. The additional 30 credits beyond a bachelor’s degree is leading many candidates to reconsider their choice of career or delay pursuing licensure.
Our position
Providing Work and Learn programs and opportunities offers a practical, feasible solution to help grow the accounting profession. The PICPA is helping to facilitate these programs and encouraging higher education institutions and firm leaders to adopt these programs.
Work-and-Learn Models for CPA Candidates: Taking Action to Eliminate Barriers
by PICPA CEO Jennifer Cryder, CPA, MBA
Pennsylvania CPAs try out work-and-learn model
Accounting Today
Reviewed June 2024
CPA Credit Relief Initiative
The issue
In response to significant health, economic, education, and travel disruptions resulting in CPA Examination candidate hardships, extensions were proposed for any CPA Examination credits that expired from Jan. 30, 2020 through May 11, 2023.
Our position
The PICPA supports the Credit Relief Initiative and encourages the Pennsylvania State Board of Accountancy to adopt the policy. We also encourage all of our CPA candidate members to apply for credit relief by the March 31 deadline.
Status: Passed December 2023
Update: 223 Pennsylvania candidates received credit for lost exam sections restored.
NPAG Report and Pipeline Promise
The issue
The National Pipeline Advisory Group (NPAG) was created to develop a unified strategy that reflects the needs of multiple stakeholders, leverages unbiased research, and leads to meaningful change. The Advisory Group is focused on boosting awareness of the profession’s vital role, driving innovative pipeline strategies, and ensuring the next generation of accountants is prepared for tomorrow’s challenges. The NPAG reflects diverse perspectives from across the profession. Members represent firms of all sizes, academia, CPA state societies, regulatory bodies, professional associations, and various career stages, among many other viewpoints. PICPA’s immediate past president, Betsy Krisher along with other national leaders spent countless hours seeking solutions to help address hurdles on the path to CPA licensure and provide flexibility for candidates of all backgrounds.
Our position
The PICPA supports NPAG's findings and report. We're encouraging our members to take the Pipeline Pledge, an individual commitment to participate in two activities of your choosing that can influence and grow the talent pool.
Read the Draft Strategy Report
NPAG
Reviewed June 2024
The CPA Pipeline Crisis
The issue
The pipeline challenges the profession are facing are reflective of the fact that relevance of CPAs are in question. Firms must lean on business model transformation to fix the relevance problem and thus pipeline. Firms are struggling to attract new talent, keep their Gen 2 or Gen 3 around, and grow their practice.
Our position
The PICPA believes it is critical that business owners and executives in the accounting profession look inward and plan for significant adjustments to address our current pipeline and quality challenges. Firms must look at how their current model is set up and determine if it's time to change. The next generation of CPAs must be provided with more to unlock their potential and keep them interested. Firms can do this by building more distinct career paths, adding new revenue opportunities or client services and automating or digitizing their business. This will give employees a greater sense of purpose while increasing revenue channels. Clients have come to value CPAs as business advisors and not just bookkeepers. By expanding client services to encompass consulting, mergers and acquisitions, and more, accounting firms can better support their CPAs, fostering professional growth and development. Such a diversified service portfolio allows these firms to cross-sell to clients, strengthening client relationships and ensuring long-term business sustainability. The tech-savvy generations coming into the profession are increasingly drawn to career paths that promise innovation and technological advancement, and presenting accounting in this light will be a significant draw. CPA firms must also rethink their equity and compensation strategy. Rethinking an entire business model and implementing meaningful changes won't happen overnight, but the conversation needs to be had before it is too late.
Why the CPA Profession Needs to Overcome its Challenges Quickly and Collaboratively
by PICPA CEO Jennifer Cryder, CPA, MBA
The Evolving Role of State Societies
The Unique CPA Podcast
Why the CPA qualification’s 150-hour college credit rule is outdated–and inequitable
Fortune
Reviewed June 2024
Dual Enrollment
The issue
Early exposure to accounting is proven to be influential to students choosing majors and future career plans. There is also significant cost associated with obtaining a college degree and, specifically, the additional credits needed for a CPA license. Offering high school students the chance to enroll in a college accounting course not only introduces them to exciting curriculum, but also offers an affordable way to begin obtaining college credits.
Our position
The PICPA has partnered with Outlier to offer a 3 credit, completely virtual asynchronous Intro to Accounting Course through the University of Pittsburgh, paid for by the PICPA. Students participating in the program have a support person at their school who can provide direction through proctoring exam and adhering with course timeline.
Why the CPA Profession Needs to Overcome its Challenges Quickly and Collaboratively
by PICPA CEO Jennifer Cryder, CPA, MBA
PICPA and Outlier Bring College Accounting to High Schools
by Matt Greene and Kristen Wilbert • CPA Now Blog
Reviewed June 2024
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PICPA Announces 2024 Accounting Scholarship Recipients
Jul 19, 2024More than $200,000 worth of scholarships and financial support were provided to 135 recipients.Full story -
The PICPA Welcomes Matthew Melinson to Serve as President, Announces David Stonesifer as President-elect
Jun 13, 2024PICPA announces Matthew Melinson to serve as President and announces new President-elect, who will spearhead key accounting profession priorities.Full story -
Why Former CPAs are Leaving and What Existing CPAs Want: CPA Talent Retention Survey from the PICPA Sheds Light On Accounting’s Retention Challenges
Apr 25, 2024The Pennsylvania Institute of Certified Public Accountants Latest Survey and Insights Report Emphasizes Need for Changing Business Models in the Accounting ProfessionFull story -
PICPA Kicks Off Accounting Career Day Series To Support High School Students Pursuing an Accounting Degree
Oct 11, 2023Over the next three weeks, the PICPA will bring keynote speakers and educational panels to universities across the state designed to support high school students interested in pursuing a degree in accounting.Full story -
Pennsylvania Institute of Certified Public Accountants Issues 2023 State of Pennsylvania Public Accounting Firms Study
Apr 26, 2023The PICPA releases a new whitepaper providing key insights that show PA accounting firms navigating talent and technology gaps while meeting a higher demand for services.Full story
