Case 7.6
Scott Fane, CPA
Versus
Florida State Board of Accountancy
Scott Fane, CPA, moved to Florida from New Jersey in 1985 because
he hoped that Florida’s healthy economy would allow him to develop
a successful accounting practice
Scott Fane, CPA, moved to Florida from New Jersey in 1985 because
he hoped that Florida’s healthy economy would allow him to develop
a successful accounting practice
In New Jersey, Fane used direct solicitation to pursue potential
clients, but Florida’s state board banned direct solicitation by CPAs
Scott Fane, CPA, moved to Florida from New Jersey in 1985 because
he hoped that Florida’s healthy economy would allow him to develop
a successful accounting practice
In New Jersey, Fane used direct solicitation to pursue potential
clients, but Florida’s state board banned direct solicitation by CPAs
Fane sued the Florida Board of Accountancy, alleging that its ban
on direct solicitation infringed on his First Amendment rights of
freedom of speech
Scott Fane, CPA, moved to Florida from New Jersey in 1985 because
he hoped that Florida’s healthy economy would allow him to develop
a successful accounting practice
In New Jersey, Fane used direct solicitation to pursue potential
clients, but Florida’s state board banned direct solicitation by CPAs
Fane sued the Florida Board of Accountancy, alleging that its ban
on direct solicitation infringed on his First Amendment rights of
freedom of speech
The Supreme Court ruled in Scott Fane’s favor, concluding that
the Florida State Board failed to prove that allowing CPAs to use
direct solicitation methods posed a serious harm to the public
While the Scott Fane background provides a starting point, our
concern should be focusing on how some of these aspects,
especially competitive bidding restrictions, could affect the audit
function.
While the Scott Fane background provides a starting point, our
concern should be focusing on how some of these aspects,
especially competitive bidding restrictions, could affect the audit
function.
Prior to 1978 the Code of Professional Ethics did not allow
CPAs to engage in competitive bidding practices to obtain
clients.
While the Scott Fane background provides a starting point, our
concern should be focusing on how some of these aspects,
especially competitive bidding restrictions, could affect the audit
function.
Prior to 1978 the Code of Professional Ethics did not allow
CPAs to engage in competitive bidding practices to obtain
clients.
At that time, through agreement with the Federal Trade
Commission, CPAs could engage in competitive bidding
practices as long as they were not false nor misleading
What effect might the competitive bidding process have on auditing?
What effect might the competitive bidding process have on auditing?
Competitive bidding by its nature will tend to drive down the audit
fees paid for independent audits.
What effect might the competitive bidding process have on auditing?
Competitive bidding by its nature will tend to drive down the audit
fees paid for independent audits.
This will likely reduce the profitability of audit engagements
What effect might the competitive bidding process have on auditing?
Competitive bidding by its nature will tend to drive down the audit
fees paid for independent audits.
This will likely reduce the profitability of audit engagements
Why?
What effect might the competitive bidding process have on auditing?
Competitive bidding by its nature will tend to drive down the audit
fees paid for independent audits.
This will likely reduce the profitability of audit engagements
Why? Auditors, in order to comply with GAAS, will generally
have to expend the same resources regardless of the amount
they are paid
What effect might the competitive bidding process have on auditing?
Competitive bidding by its nature will tend to drive down the audit
fees paid for independent audits.
This will likely reduce the profitability of audit engagements
Why? Auditors, in order to comply with GAAS, will generally
have to expend the same resources regardless of the amount
they are paid
In the long run competitive bidding may cause firms to de-emphasize
auditing in favor of other more profitable services such as consulting
and tax.
What might the future hold for the auditing profession?
What might the future hold for the auditing profession?
One might speculate that the effect of the competitive bidding
process, among other factors, has helped to contribute to the recent
state of financial failures in the United States.
What might the future hold for the auditing profession?
One might speculate that the effect of the competitive bidding
process, among other factors, has helped to contribute to the recent
state of financial failures in the United States.
However, these financial failures may have brought about changes
that will strengthen the audit function in the future.
What might the future hold for the auditing profession?
One might speculate that the effect of the competitive bidding
process, among other factors, has helped to contribute to the recent
state of financial failures in the United States.
However, these financial failures may have brought about changes
that will strengthen the audit function in the future.
The Sarbannes-Oxley legislation with its expanded requirements on
both management and the auditors may bring about the return of
CPA firms that once again specialize in auditing and that are able to
receive professional compensation for their services