So you've timely and properly renewed your license. You've taken all the CPE credits required and you checked the box saying that you took them. Now you've received a letter stating that your renewal application has been accepted for a CPE audit. What should you do? These letters will start going out after the Board Staff has processed all the renewal applications. As you can imagine with all the renewals at one time in Pennsylvania, this is a busy time of the year for them.
First, don't panic. According to the information I have received the Accountancy Board will audit approximately ten (10%) percent of individual licensees as they have done after past renewals. You are not the only one in this position. I recommend you consult with an attorney because of the problems I have seen arise when licensees try to handle these situations on their own, but I understand that you probably won't want to go through the cost and aggravation of an attorney when you believe you have taken all the required CPE and can demonstrate that to the Board. The issues of course are whether you have in fact taken all the required CPE and can demonstrate that.
I recommend putting each of your courses in a spreadsheet with the dates taken and categories each course satisfies. CPAs must remember that you need at least twenty (20) credits in each calendar year in addition to the hours in ethics, taxation, and accounting and auditing. You will need to gather each of your certificates of attendance. Your provider is required to provide you with a certificate and is most likely able to provide you with a replacement if you have misplaced the original. You need to review each certificate and make certain it provides the amount of credits, the type of credits, the date(s) of attendance, and the providers ID number(s).
CPAs and other professionals have found themselves in trouble when the course provider is not approved or the specific course is not approved. Your certificate of completion or attendance should state the provider's approval numbers and what entity or entities have approved the course. It is the licensee's responsibility to make certain that the courses were approved. For CPAs in Pennsylvania, that generally means approved by NSBA or one of the State Boards of Accountancy. In practice, most CPAs do not look at their certificates and do not check if the provider is approved to provide CPE in Pennsylvania. It is too late after the fact to make up any missing CPE after 12/31 of the renewal year.
Of course if you did not take all your required CPE you will find yourself in trouble with the Board. This is a situation several CPAs find themselves in after each renewal period. You will certainly have to make up the missed CPE and will most likely find yourself with a licensing violation and fine. This will be reported on your record and available to anyone who looks up your license. Unfortunately, at this time, there is no means to have this removed from your license. However, legislation has been introduced that would allow for a one time expungement of violations like these. See SB 619 at the following link. http://www.legis.state.pa.us/cfdocs/legis/PN/Public/btCheck.cfm?txt&sessYr=2013&sessInd=0&billBody=S&billTyp=B&billNbr=0619&pn=0595
Keep in mind that if you have taught a course you may be entitled to additional credits for your time preparing your materials and your presentation. This has on occasion saved a licensee from a license violation and fine if these additional credits can satisfy what was otherwise missing. Further, if Pennsylvania does not accept some or all of your credits, you do have an equitable argument that you attempted in good faith to obtain the proper credits and that your actions do not deserve punishment.
If after the audit the Board is not satisfied that you have taken the required CPE, then an Order to Show Cause will be filed against you and a prosecutor from the Bureau of Professional and Occupational Affairs will seek a determination by the Board that you have violated the CPA Law and that you should be subject to discipline which will certainly include a fine, notice of violation, and possibly costs of prosecution. In extreme cases, like not taking any CPE but stating that you did, they might seek to have your license revoked. Frankly, any time there is a question from the Board concerning your license or request by a Board investigator to meet you, should have the advice of counsel. But, if you recieve an Order to Show Cause, you really must seek legal advice.If you have any questions about licensing please contact me at firstname.lastname@example.org.
The Pennsylvania CPA Journal - link to article - http://goo.gl/Y3FKu
link to video - http://t.co/g1AYoHRXCc
Comfort letters – the fight continues. . . CPAs beware. . .
Unfortunately, the federal Consumer Financial Protection Bureau has muddied the waters while implementing the Truth in Lending Act. Although not even in effect, lenders are already pointing to the new regulations as justification for the need for a comfort letter. Are you prepared to respond?
C & W Website - link to article - http://goo.gl/dDQkw Two CPA firms “not guilty” of practicing without a license
The Pennsylvania Board of Accountancy has dismissed prosecutions against two of my clients for practicing without a license. In both instances, the prosecutor was seeking substantial fines of $5,000 or more. However, the CPAs had done what they thought was required and the Board appropriately dismissed each case.
The noisy withdrawal has long been a tool for attorneys in balancing their legal and ethical responsibilities with their
knowledge of a client’s improper activity. It has also become a common issue for CPAs. The basic concept is that the professional having become aware of a client’s improper activity (such as employee theft) withdraws from the representation and notifies the proper authority of their withdrawal. The withdrawal is done in such a way that the authorities are alerted to the fact that there may be a problem. If the client has caused the professional to give their professional opinion on some false information or pretenses the withdrawal will often be accompanied by a withdrawal of the opinion.
This is most often noticed in large public company settings because of the public scrutiny that can essentially arise in almost any situation. Further, the Securities Exchange Commission (“SEC”), particularly through the Sarbanes-Oxley Act of 2002 [“SOX”],has requirements, in certain circumstances, for a noisy withdraw. The SEC even has an Office of the Whistleblower. http://www.sec.gov/whistleblower
SOX requires that attorneys report “evidence of a material violation of securities law or breach of fiduciary duty” to the chief legal counsel or chief executive officer of the company. If there is no appropriate response then report to the board of directors or appropriate committee of the board of directors. This is referred to as “up the ladder”reporting. In addition, it is both a good practice and requirement to attempt to resolve the issues with the client before making a noisy withdrawal.
SOX requires a noisy withdrawal by an outside attorney if the company has not responded appropriately, the violation is ongoing or about to occur, and the likely result will be substantial injury to the investors. In this situation, the attorney has one day to withdraw, indicating that the withdrawal was “based on professional considerations,” and must disaffirm any statements the attorney has made to the SEC which may be false or misleading. In house attorneys must disaffirm but are not required to resign their employment.
An issue arises as to how one disaffirms a statement and what confidential client information may be disclosed. The SEC permits the disclosure of confidential information without the client’s consent. However, this rule is in conflict with various state rules. The important thing is to make the withdrawal and any disaffirmance while revealing as little confidential information as possible. It is quite possible that the intent can be accomplished without revealing any confidential information.
The SEC has expanded the requirement for noisy withdrawal to CPAs in certain circumstances as well. Without getting into all the details, investment advisors, who are qualified custodians, must have an audit. The auditor is required to notify the SEC within one business day of any material discrepancies and make a noisy withdrawal.
There are other circumstances in which a noisy withdrawal would likely be appropriate for both attorneys and accountants, and following the SEC rules would go a long way to demonstrate that an accountant or attorney handled the matter properly. The law in this area is still developing so if you find yourself in this situation, handle it very carefully.
I can be contacted at email@example.com
Okay. You have received a letter from the PICPA Committee on Professional Ethics ("the Committee") indicating that it has received information that "you may have violated the PICPA Code of Professional Conduct
." What do you do? Stop. Breathe. Remember it is not the end of your world. The Committee’s role is remedial not to punish. If you are doing something wrong the goal is to help you learn and improve and thus protect the public and provide a better service.
For clarification purposes, if you have committed a felony and in some other egregious situations, you will be expelled. However, in these situations you generally have a lot more to worry about than your PICPA membership.
The Committee commonly refers to this letter as the "Opening Letter." The last thing you want to do is ignore this letter. Do not bury your head in the sand and hope this will go away. It will not. Keep in mind that as a member of the PICPA you have agreed to abide by the Code of Professional Conduct
and a part of the Code is that you will cooperate with an ethics investigation. Failure to cooperate is grounds for termination of your membership in the PICPA. Not responding to the committee when it asks for a response and/or further information is failing to cooperate and may lead to expulsion from the PICPA. The good news is that if you do not respond to the first letter there will be a follow-up about 30 days letter giving you another opportunity to respond. The reality is that you will have to ignore numerous opportunities to respond before you will be expelled for non-cooperation.
You generally have thirty days to respond to the Opening Letter. Appropriate responses to this letter include just about anything that demonstrates that you will cooperate. You can ask for more time, you can provide the requested information, and you can ask for a deferral because the underlying matter is in dispute in any court of law and/or if there is an ongoing investigation by another regulatory body (i.e. the SEC). Deferrals are routinely granted and are preferred by the Committee because a member should not have to fight a battle concerning their actions on two fronts at the same time and because any investigation or findings by the Committee should not be used as leverage in any other proceeding. You will eventually have to provide the requested information, even if it is years later after the matter has been deferred during that time (i.e. while you defend yourself from a civil lawsuit). Should you request additional time to respond to the Opening Letter, the Committee will generally work with you, if demonstrate you need extra time.
Once the Committee has the information requested it will review all the information and ask for more information if necessary. It will ultimately decide whether there has been any violation of the Code. The best outcome is a letter from the Committee that based upon the response received that the Committee "has concluded not to pursue the matter at this time." The worst case is expulsion from the PICPA but this does not directly affect your license to practice accounting. Typically, the Committee will recommend CPE’s that will help you learn and understand how to do a better job the next time you under take a similar engagement. Other remedial measures include pre or post issuance reviews, an accelerated PEER Review and restrictions on performing PEER Reviews. Short of expulsion, the Committee also has the authority to suspend a member up to two years and to publicly admonish the member.
Before the Committee will decide anything other than an outright dismissal based upon your initial response you will be offered an interview where you will be given an opportunity to answer questions and present your side of the issues. There are a number of procedural and due process protections. Additionally, members can agree to settle cases rather than undergo a full investigation. Where no settlement agreement is reached the case is heard by the AICPA Joint Trial Board for a decision.
Please let me know if you have any general questions about this topic but if you have a specific matter before the Ethics Committee I cannot address those issues because I represent and advise the Committee on legal issues including due process issues as they may arise. firstname.lastname@example.org
On Saturday, December 1st, it became official. The revised regulations were published in the Pennsylvania Bulletin and now all licensed accountants in Pennsylvania must obtain at least four hours of CPE in ethics during each renewal. Pennsylvania has not made this ethics requirement state or statute specific, so any ethics course from any approved sponsor is acceptable. Be sure to obtain your 4 hours from an approved sponsor before December 31, 2013.
Speaking of approved program sponsors, the new regulations clean up what entities are approved sponsors, which will eliminate most of the prosecution that has historically resulted from courses not being approved by the Board. Now any sponsor who is approved by the state board of another state that has substantial equivalency is deemed to be an approved sponsor along with anyone who is NASBA approved. This is good for PA accountants because all of our neighboring states and almost every state has substantial equivalency.
In other items of interest, the Board did elect to maintain “specialized knowledge and applications” as an approved subject area. CPAs further retained the ability to obtain CPE credit for authorship of writings. However, to receive credit for authorship each licensee must receive approval from the Board prior to renewal for these credits to apply, so if you are considering this, please keep the time constraints in mind and review the regulations for the specific requirements.
Also published the same day, were regulations adopted by the Board which set forth a schedule of civil penalties for first offenses for CPE violations and unlicensed practice. Hopefully, the prosecutors who handle accounting licensing cases will begin to use this process for these “minor violations” rather than the formal filing that results in a hearing and full prosecution. Further, it is hoped that someday there will be legislation that passes allowing expungement of these “minor violations”. Legislation was introduced in the last session by Representative Harper [HB 646]that would have made this the law. Unfortunately, while it passed the house (unanimously I believe), it stalled in the Senate and never came out of committee. Therefore, this legislation will have to be reintroduced in the next legislative session.
Here are links to the PA Bulletin where these regulations were published. http://www.pabulletin.com/secure/data/vol42/42-48/2312.html
(Continuing Professional Education)http://www.pabulletin.com/secure/data/vol42/42-48/2313.html
(Schedule of Civil Penalties)
If you have any ethics or licensing questions please contact me at email@example.com
. Please sign up for any of my ethics courses through PICPA or contact me if you wish an in house ethics course.
Even if you haven’t taken an ethics course you already know that it would be unethical to lie about having taken an ethics course. The New Jersey Board of Accountancy collected $4.2 million in penalties from CPAs last year who apparently did just that. That’s right $4,200,000.00! The New Jersey Star Ledger reports that this amount exceeded the “total amount of penalties leveled by all the state boards in each of the last five years.” The largest fine assessed was $8,000, so there were a lot of CPAs who failed to obtain the required CPE.
In New Jersey, CPAs are required to take a state specific ethics course every three years. Like many states New Jersey usually selected about 10% of renewal applications to conduct an audit of all CPE courses. Instead, last year they elected to compare the list of attendees at the required ethics course from 2006 through 2008 to the list of CPAs who renewed as of January 1, 2009. Everyone who filed a renewal but had not attended the state specific course was audited for all courses. While I’m certain some of these CPAs attended a non-state specific ethics course and believed that was acceptable there was a disturbingly large number of CPAs who didn’t take any courses. That means these CPAs lied on their applications not only about taking the ethics course but also about taking the required 120 hours.
Not surprisingly the New Jersey Board has indicated that it will conduct another audit for the January 1, 2012 renewals and it should come as no surprise that other states and other professional boards are considering conducting audits of their own. $4.2 million is certainly an incentive for any state. New Jersey has already indicated that they may more vigorously review doctors, nurses, pharmacists and psychologists.
CPAs are generally considered to be the most honest and trustworthy profession, so, if they have trouble meeting their ethics requirements the other professionals are as well. Hopefully, the lesson learned here is that every professional should take their CPE requirements seriously. If anyone has any questions about their requirements or has a licensing issue please contact me. And remember to contact me before meeting with an investigator.
For CPAs, please remember that in Pennsylvania, your next renewal will be on January 1, 2014. You are required to obtain at least 20 CPE credits each year during the two year cycle and 80 hours total during that period. Although the regulations still have yet to be passed, the Board has indicated that it will be requiring 4 credits of ethics for the upcoming renewal. Remember, it is also your responsibility to make certain that the CPE credits you have taken are approved for credit in Pennsylvania. Your provider should be able to give you this information.
All other professionals have renewal deadlines and CPE requirements which must be followed.
While it remains to be seen if Pennsylvania will increase its CPE audits and prosecutions, you can avoid any concern about an audit or prosecution if you simply follow the regulations of your profession.
The Pensylvania State Board of Accountancy has posted on its website a Special Notice concerning unlicensed and never licensed firms. The notice is available at http://www.portal.state.pa.us/portal/server.pt/gateway/PTARGS_0_185581_1262397_0_0_18/Acct%20Notice%20Amnesty%20Program%20for%20Firm%20Licensure%20Registration.pdf
Mike Colgan, PICPA's CEO and Executive Director, has posted a blog about this program and other issues athttp://cpanow.picpa.org/2012/06/25/state-board-announces-firm-license-amnesty-plus-other-disciplinary-issues/
"A firm of any size, other than an individual/sole proprietorship is required to be licensed." Unfortunately, the amnesty is only available for those firms that have never been licensed. If your firm is not currently licensed please feel free to contact me and we can determine what options you have. firstname.lastname@example.org This amnesty will be available until December 31, 2012.
CPA firm not 'guilty' of practicing without a license. See why in this article. http://goo.gl/mLYBX
Every case is different. If you have a licensing matter please contact me and I will see if there is anything I can do to assist you.
Mike Colgan, the new Executive Director and CEO of the Pennsylvania Institute of Certified Public Accountants, has recently brought an issue to my attention. The issue is that when CPA’s provide documents to the State Board of
Accountancy during a license investigation some of those documents are being made available to the public. This
is despite the fact that some of these documents may be protected by the accountant client privilege. Without going through all the prosecutions by the Board, there is no way to know how often client documents are being made available to the public. However, I looked at nine of the most recent licensing violations. Of those nine, three of the consent orders had what appeared to be confidential client documents attached and therefore available to the public.
Of these three, only one of the CPAs (or their attorney) thought to have the documents redacted with their client’s identifying information removed.
In Pennsylvania the CPA Law provides an accountant client privilege. However providing documents to the Board in a licensing investigation is an exception to the privilege. Therefore, ethically a CPA can provide any documents requested by the Board. There is no guidance in the statute as to what the Accountancy Board can do with them.
It turns out in some cases they attach them as exhibits to the consent orders and make them available to anyone who asks to see the disciplinary history! While there is no ethical problem with this for the CPA it certainly has the potential for a client problem if the client discovers that their tax returns or audit paperwork are available to the general public. Certainly if the client is harmed in some way by this information leaking out they would have a cause of action to sue the CPA. The client could claim that this was a foreseeable result of the CPA releasing this information without any protection to the client. Without addressing the merits of such a claim, which I believe should be vigorously defended, no CPA wants to be sued in the first place or have to deal with a lawsuit, the costs or the aggravation.
There is a simple fix. When asked by the investigator or any representative of the Board to provide any client documents, redact all client identifying information. Name, address, social security or tax identification numbers and phone numbers all should be removed. They can be whited out or blacked out with a permanent marker. It will be obvious that information was removed and that’s ok. Don’t remove anything other than the client identifying information. I even recommend that when you provide the documents to the Board your cover letter indicates that you have removed all client identifying information, and if there is anything you missed, that information should also be removed before any of the documents are made available to the public.
The Accountancy Board should have no problem with this. If they do you should contact an attorney before turning over any documents and your attorney should be able to convince them that the redacted documents will serve their
purposes. (Frankly, your license is too important not to have the advice of counsel in a license investigation or
While I don’t know if this may be an issue for any other profession with a recognized privilege but I can’t imagine that any of the medical boards are publishing patient’s medical records so it is unlikely. However, keep in mind that if your profession has a privilege you can (and probably should) always redact the client identification information unless it somehow relates to the prosecution’s case.
At this point the PICPA will attempt to address this issue with the Accountancy Board, its counsel and the prosecutors in an effort to make certain that they all understand that this is a serious issue for CPAs. We will try to stop this practice of making unredacted documents available even in the circumstances where the CPA
fails to redact the information. Hopefully, a little education will go a long way to alleviate this problem.