The CPA Board Rules: They are a’ Changin’
February 8, 2015
The NC Board of CPA Examiners recently adopted amendments to its regulations in the following areas that may be relevant to your practice if you are a CPA or work with CPAs:
Self-Reporting of Convictions, Judgments, Discipline and Investigation
- requiring CPAs to notify the board within 30 days of
- any charge or arrest of a criminal offense, not just a conviction, plea or other resolution. § 08N .0208(a);
- any settlement in lieu of a civil suit or criminal charge that is based on an allegation of professional negligence, gross negligence, dishonesty, fraud, misrepresentation, competence or violation of any federal, state or local law, regardless of any confidentiality clause in the settlement. § .0208(c);
- any inquiry or investigation by the IRS or any State Department of Revenue Criminal Investigation Divisions pertaining to any personal or business tax matters. § .0208(d); and
- the filing of any liens by the IRS or State Department of Revenue regarding the apparent failure to pay any tax amounts due. § .0208(e).
- Requiring a CPA or CPA firm not currently providing services mandating participation in peer review program to register with that program within 30 days of the issuance of the first report provided to a client for such services. Services requiring a CPA or CPA firm to participate in the peer review program include: audits, reviews or compilations of financial statements, agreed-upon procedures or attestation engagements. § 08M .0105(a) &(b).
Basis for discipline
- Adding another basis for discipline against CPAs within the definition of “discreditable conduct prohibited” to include:
- misrepresentation in reporting CPE credits, and
- entering into any settlement or other resolution of a dispute with a CPA that purports to keep its contents confidential from the Board. § 08N .0203(b).
Modification of Discipline and Reinstatement of Certificates
- Restricting rules concerning modification of disciplinary orders to apply only to permanent revocations by the Board (unless by consent). § 08I .0104(a);
- Requiring affiants supporting reinstatement of a CPA certificate to be familiar with the facts of the revocation or discipline. § .0104(b); and
- Making restitution of civil settlements, liens or other agreements with the aggrieved party an element of good cause necessary for reinstatement of a CPA certificate . § .0104(c).
CPA Firm ownership requirements
- Requiring the CPA owner of a firm to actively participate in the business of the CPA firm as his or her principal occupation. § 08N .0302(e)(2).
- Eliminating “retired” status so a CPA is either active or inactive. 21 NCAC 08A .0301 (deleting section (32) and corresponding deletions and other changes throughout the regulations)
- Imposing additional requirements and restrictions on applying for examination and for a CPA certificate, including:
- prohibiting filing an application while serving a sentence resulting from criminal plea or conviction, including any type of probation. §§ 08F .0103 & .0502(c); and
- requiring additional disclosure and documentation regarding a criminal plea or conviction or denial of any license by a state or federal agency. § 08F .0502(c).
- Ceasing to register CPE sponsors and relying upon those in good standing with the National Registry of CPE sponsors. § 08G .0403;
- Requiring CPAs to receive and submit a certificate of completion for each CPE. § .0401;
- Requiring monitoring mechanisms for internet-based CPE programs to ensure active participation by the CPA. § .0409; and
- Allowing CPE credit for self-study based on national standard word count formulas.
For more detail about these recent changes to the rules, you can access the Board’s rules on its website.