By Peg Trevino, ISCPA Legislation Committee
Peg Trevino is a CPA and owner of Trevino Associates PC in Fort Dodge. She is a past president of the Iowa Society of CPAs (ISCPA) and has been a member of the organization since 1987.
For nearly 40 years, Iowa’s auditor of state (AOS) – an official position elected every four years – has been a certified public accountant (CPA). What does the auditor of state do and why is it so important that the position be held by a CPA?
Responsibilities of the AOS
The AOS considers its mission to be the “taxpayers’ watchdog” and their work is to help ensure government officials use taxpayer dollars for the intended purposes.
At the state level, the AOS must audit the books, records and accounts of nearly every state department. The state’s comprehensive annual financial report and single audit report are audited by the AOS.
At the local level, the AOS is responsible for audits of counties, cities, school districts and other governmental subdivisions. The AOS also provides guidance and technical assistance to CPA firms performing such audits. They also review audits and may perform re-audits if needed. Audit reports prepared by CPA firms are filed with the AOS and made public record.
The AOS also investigates suspected embezzlement, and conducts performance audits to ensure state agencies are properly administering their programs.
What is involved in a financial audit?
Performing a quality financial audit requires a comprehensive and thorough understanding of accounting principles and auditing procedures. This knowledge and expertise are needed to test and verify underlying transactions and gain assurance that financial statements are being presented fairly and in accordance with applicable financial reporting standards. Audits require an evaluation of internal controls, a clear understanding of the nature of the entity, and the business and economic climate it operates in.
Why it’s critical that a CPA head the AOS office
Knowledge of the many governmental regulations and financial reporting standards is necessary to report to the public that an entity’s financial statements and disclosures are presented fairly and free of material misstatement. This needs to come from someone with the right degree of expertise, education and regulatory oversight.
What it takes to be a CPA
A candidate for the CPA certificate must first complete 150 semester hours of study and then pass a rigorous four-part exam. To obtain a license to perform attest work — a set of protected services that can only be performed by a CPA operating within a CPA firm, such as a financial audit — a CPA in Iowa must obtain two years of experience in the accounting profession. A minimum of 120 hours of continuing education every three years is required to maintain the CPA license.
For a CPA firm to obtain a license to practice, the majority of ownership and voting rights must be in the hands of CPAs. Iowa’s administrative rule 193A.1.1 states that the AOS office is only a CPA firm if the auditor is a CPA. Without a CPA as the auditor of state, the AOS office loses its status as a CPA firm. Under Iowa Code §542.6, only CPAs operating within a CPA firm can provide attest (audit) services.
The annual renewal form for individual and firm licenses administered by the Iowa Professional Licensing Bureau states, “only a CPA firm may perform audit, review, agreed upon procedures or other attest services.”
Other benefits with a CPA at the helm
CPA firms performing governmental work in Iowa look to our AOS for guidance and technical assistance on various audit issues. The AOS provides detailed audit programs, sample financial statement formats and recommended disclosures. Our current AOS meets with ISCPA members and committee members and is available to discuss the latest developments and concerns that assist CPAs with providing quality work. A non-CPA AOS would not be as qualified to speak to these issues without that common background, knowledge and expertise.
The ISCPA Legislation Committee strongly believes that the auditor of state needs to be a CPA regardless of his or her political party or affiliation. The committee supports this position for the upcoming election and any future elections.
Peg Trevino is a CPA and owner of Trevino Associates PC in Fort Dodge. She is a past president of ISCPA and has been a member since 1987.
- Definition of attest services
- Administrative rule 193a
- Iowa Code 542.6
- Supporting a CPA as the auditor of state
- View, print or share this article as originally published in the October 2018 issue of Iowa CPA, a member publication of the Iowa Society of CPAs.
For media inquiries, contact Cheryl Miller, director of communications & membership development, at 515-985-7102.