Every four years, when it is a presidential election year, the nation tends to focus more closely on politics. Of course elections take place every year, and these campaigns involve considerable amounts of money raised and spent by all levels of candidates seeking office. Many CPAs, because they are trusted advisers and professionals, are asked to become involved as campaign treasurers or hold similar positions.
CPAs serving as campaign treasurers or the like provide a valuable service, but there are significant risks of which members should be aware. The PICPA Board and AICPA’s Professional Ethics Executive Committee (PEEC) approved revisions to the PICPA and AICPA Codes of Professional Conduct that added new guidance that became effective Oct. 31, 2015: Revised Interpretation Campaign Treasurer or Similar Financial Position1
under the Independence Rule2
“Individual in a Campaign Treasurer or Similar Position.” The revision provides guidance to those in positions similar to, but not necessarily holding, the title of campaign treasurer; addresses political parties as attest clients; and clarifies the changed terminology of municipalities to governmental entities.
Individuals sought for campaign treasurer or similar positions who are partners or professional employees of firms will need to ascertain if they remain in agreement with the independence rules in view of the potential threats to compliance. The Code of Professional Conduct requires members to consult the Conceptual Framework for Independence.3
Threats to compliance with the independence rule arise when a campaign organization or political party is an attest client and a firm member serves as campaign treasurer, or similar role, and the threat would not be reduced to an acceptable level with application of safeguards. Likewise, a candidate for whom the CPA is campaign treasurer may be running for election to a governmental entity that is an attest client of the member’s firm. In this case, advocacy, adverse interest, and familiarity pose threats to independence that could not be reduced to acceptable levels through the application of safeguards. Firms may have quality control and human resource policies in place that preclude professionals of the firm from involvement as campaign treasurers as a precautionary measure, but that may lead to limiting civic engagement of qualified individuals in an electoral process that demonstrably needs the skill and expertise of CPAs. The public interest may not be served if less-qualified individuals who are not subject to ethics rules end up having the responsibility of campaign treasurers.
With respect to independence rules, CPAs should determine whether or not the particular entity that the candidate is running for is a component unit of a state or local government, as that too can compromise compliance with the updated independence rules. With all the various authorities and regional partnerships in Pennsylvania, it is of particular concern to be fully aware of which are attest clients.
In Pennsylvania, in addition to congressional and state representatives and U.S. and state senators, there are more than 2,600 municipalities, 500 school districts, and various levels of elected judiciary. As you can see there are abundant opportunities to become a campaign treasurer. Elections for some of these offices take place each year, plus political parties and reelection committees operate on an ongoing basis.
Serving in volunteer (unpaid) capacity as a campaign treasurer or similar position would not exempt a member from complying with Code requirements under both Independence and the “Acts Discreditable” rule,4
particularly as it relates to negligence in the preparation of financial statements or records. Campaign financial reports have specified standards and due dates, along with other reporting requirements. CPAs who decide to take on a campaign treasurer-like position need to become thoroughly educated in these requirements to fulfill their roles competently without inadvertently failing to be in compliance with the relevant requirements.
Either as volunteers or in paid positions, CPAs should approach taking on a campaign treasurer role as they would any professional engagement, ensuring that they have the technical competence to fulfill their professional obligations and stay in compliance with the revised, more restrictive requirements of the relevant sections of the Code of Professional Conduct.
1 AICPA Code of Professional Conduct, Section 1.275.025.
2 Interpretations, Section 1.200.001.
3 Interpretations, Section 1.200.010.
4 AICPA Code of Professional Conduct, Section 1.400.040.
Ibolya Balog, CPA, is an associate professor and chair of the department of business, management, and economics at Cedar Crest College in Allentown and a member of the
Pennsylvania CPA Journal Editorial Board. She can be reached at email@example.com.