A legal question has become central to this year’s unusually high-profile race for state auditor: does the elected auditor have to be a certified public accountant (CPA) for the auditor’s office to issue financial audits?
There doesn’t seem to be a simple answer.
When she was campaigning at the Iowa State Fair, State Auditor Mary Mosiman, a Republican, said she’s the only CPA running for auditor this year, and that makes a difference.
“These financial reports that most government entities are required to have—they must be conducted by a licensed CPA who works in a CPA firm,” Mosiman said. “If the elected state auditor is not a CPA, the [state auditor’s] office loses status as a CPA firm and therefore would not be able to conduct these financial statement audits.”
Mosiman added most audits would have to be outsourced to private CPA firms, which she said would be an added cost to taxpayers of about $5 million each year.
Rob Sand, her Democratic opponent, has said that’s a false claim.
“It makes no difference as to whether or not this office can do its work,” Sand said Friday during a taping of Iowa Press. “It’s found in Chapter 11 [of Iowa Code]. There are four Republican county attorneys in this state who have all said my opponent’s interpretation is flat wrong, and that includes a former state party chair.”
Sand is a lawyer, a former assistant attorney general, who is seen as a rising star in the Democratic party. He says his background of investigating high-profile public corruption cases would make him an effective government watchdog.
But he and Mosiman’s legal counsel Bernardo Granwehr cite different interpretations of Iowa laws about CPA firms and the auditor’s office to back up their claims.
The executive officer of the Iowa Accountancy Examining Board, which issues licenses and enforces rules for CPAs and CPA firms, declined to weigh in on the issue.
Executive Officer Robert Lampe first said in an email that the board doesn’t have “any jurisdiction over the auditor’s office, per se.”
In a later email, Lampe confirmed the auditor’s office holds a CPA firm permit that was issued by the board. He said the board rarely addresses hypothetical questions, such as, “What would happen to that permit if a non-CPA were elected state auditor?”
Lampe said when the board does address hypothetical questions, it typically takes at least 60 days to provide an answer.
William Dilla, a professor who chairs the accounting department at Iowa State University, said the auditor’s office isn’t the same as a private CPA firm, which is required to be majority-owned by CPAs.
“It’s a very good idea for the head of that office to be a CPA,” Dilla said. “But as far as I can tell, there’s no legal requirement for that.”
But Dilla was unsure of what consequences the office would face if it loses its CPA firm permit.
Mosiman said Dilla, a former professor of hers, is wrong because she said CPAs in the auditor’s office are governed by the same laws as all other CPAs in Iowa.
When asked how Sand would be prevented from overseeing audits if he’s elected, Mosiman said, “Nobody knows exactly what would happen.” She said it’s been decades since Iowa had a non-CPA state auditor.
Mosiman also wasn’t sure what the consequences would be for CPAs working in the auditor’s office if the office lost its CPA firm license. But she said she’s certain things will change for the office.
The Iowa Society of CPAs put out a statement detailing why it’s “important” and even “critical” for the state auditor to be a CPA, but the statement didn’t definitively say that it’s legally required.
Meanwhile, Rob Sand has a campaign ad in which several CPAs endorse him for state auditor.
According to information provided by the National Association of State Auditors, Comptrollers and Treasurers, at least a dozen state auditors across the country are not CPAs. But an association spokeswoman noted this is a matter of Iowa law.