INDEPENDENCE This article was originally published in the March 1, 2024, Nebraska Examiner. THE RECENT CONTROVERSY IN NEBRASKA, INVOLVING AN attempt by the Department of Health and Human Services (DHHS) to hire a CPA firm to perform the statewide federal single audit, underscores a critical debate about the role of external auditors in governmental auditing. However, this incident should not be seen as an indictment of the CPA profession or the use of licensed accounting firms. Instead, it highlights the need for a nuanced understanding of the important role these professionals play in ensuring transparency, accountability, and the compliant use of taxpayer funds. In fact, more than 40,000 federal single audits are performed annually on states, local governments, and not-for-profit organizations, the vast majority of which are performed by CPA firms. Further, thousands of governmental financial statement audits are also performed by firms annually. First, it’s important to recognize the value that certified public accountants bring to the table. CPAs must undergo rigorous educational preparation and continuing education requirements, pass a national entrance exam and adhere to high ethical standards and professional guidelines set by the U.S. Government Accountability Office, the American Institute of Certified Public Accountants, and the Nebraska Board of Public Accountancy. These standards are designed to ensure that auditors maintain independence, objectivity, and a commitment to the public interest—and apply to all CPAs, regardless of whether they are in public practice or are employees of an agency such as the State Auditor’s Office. The suggestion by State Auditor Mike Foley that a licensed CPA firm in public practice would inherently lack independence or expertise is a misunderstanding of the profession and its regulatory framework. (See the Feb. 21, 2024, Nebraska Examiner article, “Nebraska auditor says state agency was seeking to replace him and hire a ‘hand-picked’ CPA firm.”) Licensed CPA firms play a crucial role in the auditing world, offering services that complement those of public auditors. They bring specialized expertise, innovative auditing techniques, and the capacity to handle complex financial and compliance landscapes. This diversity in the auditing sector enriches the quality of audits and can lead to more effective identification of noncompliance, fraud, and misstatements of funds. The concern raised by State Auditor Foley regarding the independence of a “hand-picked” CPA firm can be addressed through stringent CONTINUED ON PAGE 14 IS A CORNERSTONE OF THE AUDITING PROFESSION BY JONI SUNDQUIST, NEBRASKA SOCIETY OF CPAs 13 www.nescpa.org
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