TN Specific Ethics 2 Hours CPE. David Haddock, EDd,CPA

Transcription

1 TN Specific Ethics 2 Hours CPE David Haddock, EDd,CPA

2 Rules & Regulations Tennessee Board of Accountancy 2

3 Today s Objectives 1. Know how members of TN State Board of Accountancy are appointed 2. Know individual and firm rules for licensing 3. Understand CPE rules 4. Review AICPA Code of Professional Conduct 5. Understand how complaints are handled 3

4 Quiz Question New Members of the Accountancy Board are selected by: a. The Governor b. The AICPA c. Current members of the Board d. A secret committee that meets in Nashville e. A random drawing that includes all active Licensees 4

5 TN Board of Accountancy Chairman C. Don Royston, (East TN) Vice-Chair Casey Stuart, (East TN) Secretary Stephen M. Eldridge (West TN) Total of 11 members Nine must be CPAs One attorney One public member 5

6 TN Board of Accountancy Purpose Legislatively charged to protect public by >licensing CPAs/firms >regulating conduct of CPAs >prohibiting misleading titles/competencies 6

7 SBOA Appointments By governor for 3 year staggered terms Each Grand Division is equally represented Quarterly meetings-open to public (see website) 7

8 SBOA Oversight CPA license -individual -firm Investigate complaints commerce/boards/tnsba/ SBOA Attorney advises board not individual CPAs 8

9 Top 5 Problem Areas: 1. License renewal 2. Firm permit renewal 3. Continuing Professional Education 4. Peer Review 5. Professional Privilege Tax 9 9

10 TN Board of Accountancy Executive Director Wendy Garvin 500 James Robertson Parkway, Nashville, TN or

11 Becoming a CPA in TN Certificate of certified public accountant granted to: Persons of good moral character Persons meeting education, experience and examination requirements 11

12 Education At least 150 hours semester hours Holder of at least a baccalaureate degree from a college acceptable to TSBOA Educational program includes minimum 30 semester hours of accounting 12

13 Apply for License Pass the Exam!! Meet minimum 1 year experience Complete AICPA Ethics course Submit all forms/fees 13

14 Experience Individuals seeking initial licensure must have one (1) year of experience 14

15 Reciprocity TN recognizes the holder of a CPA license from any state which has been verified to be in substantial equivalence with the licensure requirements of the Tennessee Accountancy Act Individual is granted all privileges of a TN CPA without need to obtain certificate or permit from TN 15

16 License Period and Fees Period License Fees-Individuals TN grants a 2 year license CPE is also reported for a 2 year period Professional privilege tax is administered by the TN Department of Revenue Permit to practice fees due to TSBOA upon licensure renewal application 16

17 After Licensing Renew Every 2 years 80 hours of appropriate CPE Make the Big Bucks!! Pay license fee Notify SBOA of any changes (name, address, etc. w/in 30 days) Home, mailing, & business address 17

18 Address Changes Are Important To communicate with you! Business, home, mailing, & Must notify within 30 days of move could cost you $$ if you don t!! 18

19 Change in License Status Inactive removes you from CPE requirement, still have to register; cannot provide any public accounting services May Smith, CPA (Inactive) Retired age 55+; not performing any public accounting services; still must register if using title May Smith, CPA (Retired) Age 70+; no renewal fee 19

20 TN CPE Rules Basic Biennial Rules 1. At least 80 hours of CPE 2. Minimum of 20 hours in each year 3. At least 40 hours in accounting, accounting ethics, attest, taxation, or management advisory services 20

21 Qualifying Program Must contribute to professional competence Meet standards approved by AICPA and NASBA 21

22 Program Requirements Outline One hour of CPE for each 50 minutes of instruction Qualified discussion leader Record of attendance is kept Approved NASBA sponsor (or by TN law) Content reviewed by competent authority 22

23 By Rule, Qualified Programs AICPA/TSCPA and chapters of TSCPA Programs recognized by TN SBOA Technical sessions of meetings of AICPA, TSCPA, NASBA Organized in-firm or in-house programs offered without charge University or college courses 23

24 Qualified Sponsors Exempt from Registration Professional accounting organizations Universities/colleges Firms or other entities offering in-house or infirm programs for clients at no charge Government entities All others must register with NASBA and/or TSBOA 24

25 Reporting of CPE Affirmed biennially (every 2 years) w/renewal ( check the box ) Even/odd reporting year requirement based on last digit of license number Minimum of 80 hours each 2 year period (minimum 20 hours in one year) 25

26 CPE Audit All TN CPAs are subject to random audit of CPE Inactive classificationnot subject to CPE rules Upon request-provide evidence of CPE Must have word inactive adjacent to CPA Keep your CPE records for 5 years 26

27 Failure to Meet Rules Penalty of additional CPE may be assessed (8 or more hours) Must be completed within 180 days of notice Extension may be granted to meet CPE 27

28 Additional CPE Requirements 2 hours of TN Specific Ethics If providing attest functions, at least 20 hours, biennially, in A&A Expert witness must have at least 20 hours in field of expertise Carry forward of 24 hours but not as specific content hours 28

29 Other Licensing Issues Delinquent-failed to renew w/fee payment but still practicing Expired-individual or firm that chooses not to renew and surrenders the license to SBOA Reactivate-if inactive -- needs 80 hrs of CPE during prior 24 month period Reinstate-action requested following Board revocation of license Lapse--80 hrs CPE in 6 mos/penalty hrs 29

30 Firm License Every firm providing services covered by the Tennessee Accountancy Act must register with the TSBOA Sole proprietorship is a firm Must pay annual registration/renewal fee Must maintain current address, partners, etc Firm must be majority owned by CPAs 30

31 Complaints Against Firms/CPAs Must be formal complaint citing failure of professional Firm/CPA is given opportunity to respond Board (with legal advice) will take appropriate action Firm response SBOA action Complaint made 31

32 Board Attorney May Ask for investigation 2. Based on statues/rules, suggest Board action 3. Dismiss inquiry 4. Close case 32

33 Peer Review Each firm in TN performing attest services will submit to a peer review at least once every three years Review may be conducted by PCAOB, TSCPA, or AICPA 33

34 Results of Peer Review Results are communicated to firm If sub-standard, may require remediation Board may take further action if firm ignores or refuses to comply with review recommendation 34

35 What s New? Reciprocity-49 states now honor individual CPA license Board may recognize substantially equivalent foreign designation Visit NASBA site for current info AICPA-is offering exam internationally 35

36 Setting Ethical Standards SEC given federal statutory authority to define auditor independence PCAOB given responsibility for ethics & independence rules for auditors of public companies AICPA Code of Professional Conduct 36

37 Points to Ponder 1. It s not about losing your license or going to jail it s about losing your integrity!! 37

38 Points to Ponder 1. It s not about losing your license or going to jail it s about losing your integrity!! 2. Temptation is real, so how do you avoid temptation? 38

39 Points to Ponder 1. It s not about losing your license or going to jail it s about losing your integrity!! 2. Temptation is real, so how do you avoid temptation? 3. Rationalization is a powerful temptation to be avoided at all costs. 39

40 Part 2 Tennessee Specific Ethics 2016 END OF 1 ST HOUR 40

41 AICPA Code of Professional Conduct Revised January 28, 2014 generally effective 12/31/2014 Organized by topics Conceptual framework for public and private CPAs 41

42 Preamble to COPC express the profession's recognition of its responsibilities to the public, to clients, and to colleagues guide members in the performance of their professional responsibilities express the basic tenets of ethical and professional conduct 42

43 Code of Professional Conduct Calls for... An unswerving commitment to honorable behavior, even at the sacrifice of personal advantage. ET

44 Threats/Safeguards 44

45 Basic Principles of Code of Professional Conduct 1. Responsibilities 4. Independence 2. Public interest 5. Due care 3. Integrity 6. Scope and nature of service 45

46 General Standards A. Professional Competence B. Due Professional Care C. Planning and Supervision D. Sufficient Relevant Data 46

47 General Standards A. Professional Competence 1. Knowledge and skill 2. Reasonable care and diligence 3. Exercise sound judgment in application 47

48 Quiz Question The AICPA s Code of Professional Conduct requires that a CPA obtain an engagement letter from each client for all services provided. a. True b. False. 48

49 General Standards B. Due Professional Care 1. Obtain new knowledge as needed 2. Observe what it means to be a professional 49

50 General Standards C. Planning and Supervision 1. Responsible for staff 2. Training 50

51 General Standards D. Sufficient Relevant Data 1. Professional standards dictate 2. Experience and expertise --how do you get it? 51

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53 Code of Professional Conduct Pronouncements Rulings & Interpretations Intended to provide general guidance Applies to everyone Explains intent Very specific situations Required to follow Interprets pronouncements 53

54 Rules Rule 101, Independence Rule 102, Integrity and Objectivity Rule 201, General Standards Rule 202, Compliance With Standards Rule 203, Accounting Principles Rule 301, Confidential Client Information Rule 302, Contingent Fees Rule 501, Acts Discreditable 54

55 Special Note Independence Disclosures In spirit In truth Cornerstone of CPAs reputation CPA must disclose to clients any potential conflicts of interest Contingency arrangements Commissions from sales 55

56 Rules Independence, Integrity, and Objectivity 56

57 Independence Maintain an objective and impartial mental attitude Must appear independent to 3 rd party Not required for all services 57

58 Today s Environment No longer firm-based rules looking more on engagement team and who influences the engagement team Independence is an individual concern and a firm concern 58

59 Covered Member Covered Member Impaired If Individual, firm, or entity capable of influencing attest engagement All attest team members Partner/manager >10 hours on engagement Had or committed to acquire any direct or material indirect financial interest, loan, or joint business investment w/client 59

60 Other Independence Issues Multiple offices/partners not on engagement Past employment with client Future employment with client/offers/ Close relatives If impaired only one option --Issue a disclaimer of opinion --lost for that engagement year 60

61 Integrity & Objectivity Maintain objectivity Maintain integrity Free of conflicts of interest Not knowingly misrepresent facts Must not subordinate our professional judgment 61

62 Confidentiality of Records May not disclose any client info without consent (absent official legal or professional review) 62

63 TN Board of Accountancy The Rules of Professional Conduct adopted and enforced by the board cover a broad range of behaviors, but do not cover every possible unethical act. These rules include the issues of integrity, contingent fees, disclosures, competence, compliance with standards and confidential client information. When the rules are silent on any matter, the licensee should defer to the AICPA Code of Professional Conduct. (Website TBOA) 63

64 Discreditable Acts Any act that reflects adversely on the profession Any licensee or candidate for licensure who solicits, discloses, and/or uses information obtained through violation of nondisclosure statement of the Uniform CPA Examination 64

65 Possible SBOA Actions Warning letter-put on notice Civil penalties Require additional CPE Firm Peer Review-additional review sooner than 3 year cycle Probation Suspension Revocation of license! 65

66 Disciplinary Hearing May be formal or informal CPA must provide own Counsel 66

67 TN BOA FAQs I think my CPA overcharged me for some work she did. Does the Board regulate fees charged by CPAs? Neither the Board nor any other state or federal agency has the authority to regulate fees. 67

68 TN BOA FAQs How do I know if a complaint has been filed against me? Board staff will send written notification when a complaint is filed against you. Upon receiving a notice of complaint, you should respond in writing to the board within fourteen days. 68

69 TN BOA FAQs I am not a CPA. I offer bookkeeping and tax preparation for my clients. Do I have to follow Tennessee's Accountancy law and rules? No. The Board's jurisdiction is limited to licensed CPAs, PAs and licensed accounting firms. However, unlicensed individuals are not allowed to call themselves CPAs, PAs or accountants. Unlicensed individuals and firms should not advertise any public accounting services in any media. Unlicensed individuals can not issue audits, reviews or compilation reports. 69

70 Disciplinary Actions and Penalties Specific and general disciplinary actions are in TAA Dishonesty, fraud or gross negligence Holding out as CPA when not licensed Conduct adversely affecting performance Civil penalties range from $0 - $1,000 per violation Revocation or suspension of license 70

71 July 2015 BOA Disciplinary Actions Respondent: Melvin Travis, Memphis Violation: Failure to Pay Professional Privilege Tax Action: $500 Civil Penalty Respondent: J. Andrew Lipscomb, Chattanooga Violation: Failure to Respond to CPE Audit Action: $250 71

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