june2021 - 21

AICPA NEWS
AICPA Supports Setting
Tax Preparer Standards
For several years, the AICPA has led advocacy
efforts in support of tax preparer regulation.
The recent release of the American Families
Plan (AFP) includes a proposal to provide the
Department of the Treasury with undefined
authority to regulate paid tax return preparers.
Together with two additional elements recommended
by the AICPA, the Taxpayer Protection
and Preparer Proficiency Act of 2019 (S. 1192),
introduced by Senate Finance Committee Chair,
Senator Ron Wyden, captures an appropriately
defined objective as laid out by the AFP.
In a letter sent to Senate Finance Committee
Chairman and Ranking Member, Senators
Ron Wyden and Mike Crapo, and House Ways
& Means Committee Chairman and Ranking
Member, Representatives Richard Neal and
Kevin Brady, the AICPA recommends these
key elements be included in a plan to regulate
tax preparers:
■ Limit IRS's authority to require a PTIN.
■ Certain non-signing " supervised " preparers that
do not have the primary responsibility of the
accuracy of the return should be excluded.
■ Authorize IRS revocation of PTINs.
■ Require GAO to study IRS's exchange of information
with state taxing authorities with regard
to preparer regulation.
■ Reinstate IRS's Registered Tax Return Preparer
(RTRP) Program and clarify Congressional intent
with respect to the RTRP Program (additional
element #1). The RTRP program should require:
* A one-time basic individual tax competency
exam,
* Fifteen hours of annual continuing education,
* Compliance and background checks,
* Compliance with advertising restrictions,
* Compliance with the ethical standards of
Circular 230, and
* Exclusions for Circular 230 legacy preparers.
■ Mitigate marketplace confusion (additional
element #2).
■ Unlicensed preparers promoting the RTRP program
should inform the public that the IRS does
not endorse any particular preparer and direct
them to the IRS website where the differences
between various types of preparers and their
qualifications are explained. ■
AICPA Offers Recommendations on 2021-2022
IRS Guidance Priority List
The AICPA has submitted 170 recommendations
to the Internal Revenue Service (IRS) in
reference to the agency's 2021-2022 Guidance
Priority List.
Each year, the Department of the Treasury's
Office of Tax Policy and the IRS use
the Guidance Priority List to identify and
prioritize tax issues that should be addressed
through regulations, revenue rulings, revenue
procedures, notices and other published
administrative guidance. The AICPA's recommendations
pertain to guidance projects it
believes Treasury and the IRS should consider
when addressing these issues.
AICPA's high priority recommendations
relate to guidance on regulations found in the
Tax Cuts and Jobs Act (TCJA); the Coronavirus
Aid, Relief and Economic Security (CARES)
Act; and the Setting Every Community Up for
Retirement Enhancement (SECURE) Act. These
recommendations address many significant
tax issues, including employee retention
credits (ERC), Paycheck Protection Program
(PPP) loan forgiveness and various aspects of
section 199A, virtual currency taxation, and
international taxation.
Recognizing the complexities and competing
interests when drafting guidance, the
AICPA urged the IRS to consider the following
guidelines as part of the process:
■ Use the simplest approach to accomplish a
policy goal;
■ Provide safe harbor alternatives;
■ Offer clear and consistent definitions;
■ Use horizontal drafting (a rule placed in one
Internal Revenue Code section should apply in
all other Code sections) to the greatest extent
possible;
■ Build on existing business and industrystandard
record-keeping practices;
■ Provide a balance between simple, general
rules and more complex, detailed rules; and
■Match a rule's complexity to the sophistication
of the targeted taxpayers.
Suggestions are listed under the AICPA
working group that developed them and
recommendations are listed in priority order
within category. ■
AUDIT RISK ASSESSMENT GUIDANCE
ADDED TO AICPA & CIMA DIGITAL
ASSETS PRACTICE AID
" There are challenges and unique considerations when auditing
an entity that holds or transacts with digital assets, " said
Diana Krupica, CPA, AICPA & CIMA Lead Manager, Emerging
Assurance Technologies. " From performing risk assessment
procedures [to] understanding new processes and controls
to identify related parties, it is important for auditors to look
through the lens of digital assets and understand exactly what
audit procedures need to be performed. We hope this latest
guidance will help auditors consider the potential risks unique
to the digital assets environment. "
This new material will complement accounting and auditing
guidance issued last year. It is based on professional literature
and experience from members of the AICPA & CIMA Digital
Assets Working Group (DAWG) and AICPA & CIMA staff and
is specific to the U.S. Generally Accepted Auditing Standards
(GAAS).
As the digital asset ecosystem evolves, the auditor continues
to be presented with unique risks and challenges. In
response, AICPA & CIMA - which is driven by the Association
of International Certified Professional Accountants - today
updated its practice aid, Accounting for and Auditing of Digital
Assets, to include nonauthoritative guidance in the auditing
areas of risk assessment, processes and controls, laws, and
regulations and related parties.
Risk Assessment and Processes and Controls
This section of the practice aid is organized into the following
topics:
■ Understanding the Entity and Its Environment
■ Understanding and Evaluating the Entity's Risk Assessment
Process
■ Understanding the Entity's Processes and Controls
Each section describes the individual considerations
that may be important when performing risk assessment
procedures, including the types of procedures that auditors
may perform, or are required to perform, to identify and
assess risks of material misstatement in audits of entities
engaged in the digital asset ecosystem.
Laws and Regulations and Related Parties
This section addresses the unique challenges and potential procedures
auditors consider for both compliance with laws and
regulations as well as identification, accounting, and disclosure
of related parties in an audit of an entity that holds or transacts
with digital assets. Because related party transactions may
reflect a risk of material misstatement due to noncompliance,
these topics are considered in the same section.
In addition, appendix A, Blockchain Universal Glossary,
has been added to the practice aid that was developed
as a reference for all AICPA & CIMA blockchain and digital
assets-related content.
JUNE 2021 ■ www.CPAPracticeAdvisor.com
21
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june2021

Table of Contents for the Digital Edition of june2021
