CPA services mostly exempt from SEC municipal adviser registration

BY KEN TYSIAC
September 24, 2013

Many CPA services are excluded from the activities that would require registration as a municipal adviser under new rules approved by the SEC last week.

Under the regulations, which were scaled back from a previous proposal, CPAs would not be required to register as municipal advisers if they are providing audit or attest services, preparing financial statements, or issuing letters for underwriters, according to a specific exemption given by the SEC.

But CPAs and others who provide certain other advice to municipalities—including tax advice on municipal securities offerings—will be required to register with the SEC as municipal advisers.

The SEC last week voted unanimously to adopt rules to establish a permanent registration of municipal advisers, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203.

State and local governments that issue municipal bonds often rely on the expertise of municipal advisers to help them decide how and when to issue the securities and how to invest proceeds from the sales. The rules require municipal advisers to register with the SEC if they provide advice on the issuance of municipal securities, certain investment strategies, or municipal derivatives.

“These rules set forth clear, workable requirements and guidance for municipal advisers and other market participants, which will provide needed protections for investors in the municipal securities markets,” SEC Chairman Mary Jo White said.

The new rules take effect 60 days after they are published in the Federal Register.

The AICPA generally supported the investor protections in the proposed rules but was concerned that the broad definition of “municipal advisor” in the proposed rules would apply to accountants performing customary accounting services who should not have been subjected to the required registration.

In a Feb. 25, 2011, letter to the SEC, the AICPA wrote that the section of the Dodd-Frank Act requiring registration of municipal advisers was not intended to apply to:

  • Accountants advising municipalities on application of GAAP or providing certain types of tax advice relating to municipal securities and derivatives.
  • Accountants providing governments or other involved parties with certain information during the process of issuing securities that typically would be performed as attestation engagements.
  • Accountants performing examinations, compilations, or agreed-upon procedures engagements on projections and forecasts using the AICPA Statements on Standards for Attestation Engagements.
  • Accountants providing compliance audits.


The SEC’s final rules included a scaled-back definition that did not require registration as municipal advisers by accountants in most of those circumstances.

AICPA President and CEO Barry Melancon, CPA, CGMA, commended the SEC for its flexibility on the issue. Melancon also acknowledged the support of members of Congress who introduced legislation that would have exempted accountants from the municipal adviser definition.

“Accountants providing audit and attestation services are already subject to layers of regulation that are intended to protect investors,” Melancon said in a statement. “We are pleased that the SEC expanded the accountant exemption to include audit and attestation engagements, preparation of financial statements, and the issuance of letters for underwriters.” 

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

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