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South Carolina Board of Accountancy

South Carolina Board of Accountancy. 2011 Update. What is the SC Board of Accountancy?.

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South Carolina Board of Accountancy

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  1. South Carolina Board of Accountancy 2011 Update

  2. What is the SC Board of Accountancy? • The SC Board of Accountancy is the body responsible for the administration and enforcement of the SC Accountancy Practice Act, including but not limited to, the issuance of individual Certified Public Accountant and Accounting Practitioner licenses and firm licenses, discipline, and Continued Professional Education regulation

  3. Composition of SC Board • 5 CPA’s • 2 Public Members • 2 Accounting Practitioners

  4. Staff Of SC BOA • Doris Cubitt, CPA • Michael Teague • Amy Holleman • CUBITTD@llr.sc.gov

  5. CPA EXAM AND CBT-e

  6. CPA EXAM REQUIREMENTS • To sit for the CPA Exam as a SC candidate, applicants must: • Submit an application to sit for the Exam through CPA Exam Services (CPAES) • Submit application fees and payment to CPAES for the Exam sections the applicant intends to take during the NTS period • Meet SC’s educational requirements to sit • Be an American citizen or have Resident Alien status • Have a clean criminal background

  7. In order to meet the educational requirement to sit for the Exam as a SC candidate, Applicants must present: • A minimum of 120 overall semester hours from a regionally accredited college or university with: • 24 semester hours in Accounting to include Financial, Managerial/Cost, Audit, and Tax at the junior level or above • Accounting hours may include one three semester Business Law course if necessary • 24 semester hours in Business • Business Courses may include, but are not limited to, Management, Marketing, Economics, Finance, Statistics, Computer Science, Business Writing, Business Ethics, Business Law

  8. Authoritative Literature • New release of the Authoritative Literature databases • The databases will be on AUD, FAR and REG sections only • A new search engine • More intuitive • More fluid navigation • Improved Help screens • A new response format for the research question Source: AICPA

  9. Section Weights • Current Weights • AUD, FAR and REG • MCQs = 70% • Sims = 20% • WC = 10% • BEC • MCQs = 100% • New Weights • AUD, FAR, REG • MCQs = 60% • TBSs = 40% • No WC • BEC • MCQs = 85% • WC = 15% Source: AICPA

  10. New tools and exam functionality • New calculator • New research response format • New authoritative literature search engine • New spreadsheet • In-cell editing • Formula wizard • Function wizard • New spell check tool • New Directions and Help screens Source: AICPA

  11. Initial CPA Licensing Requirements • Successful completion of all four parts of the CPA Exam within a rolling 18 month window • Education: • 150 overall semester hours with a minimum of a bachelor’s degree • 36 semester hours in Accounting • 36 semester hours in Business • Work Experience • Ethics • Professional Ethics: The AICPA’s Comprehensive Course with a score of 90 or better

  12. Work Experience to license • Must submit: • One year’s qualified work experience under the direct supervision of a licensed CPA; • 2,000 hours part-time (no more than 40 hours a week) under the direct supervision of a licensed CPA; • 5 year’s qualified teaching experience at the college/university level; or • Any combination of the above • Work experience may not begin until the applicant completes the educational requirements necessary to sit for the Exam • Work experience in industry must be substantially similar to the type and quality of experience the applicant would gain in a public accounting firm

  13. Mobility and Reciprocity • Mobility applies to CPAs in other states who are actively licensed in the states of their primary places of business. • Substantial Equivalency applies to mobility • Reciprocity is necessary for a CPA who is licensed in another state, and whose primary place of business is SC or who is licensed to practice in a state which is not substantially equivalent • Persons applying for reciprocity who have been licensed for a period of less than four years must meet SC’s requirements for licensure

  14. NEW CPA LICENSES - 2010 • The South Carolina Board of Accountancy issued 180 new CPA licenses in the year 2010 • 128 of those CPA licenses were original licenses • 52 of those CPA licenses were based on reciprocity • As of the July 18, 2011 Board meeting, the Board has issued 154 new CPA licenses for the year 2011. • 101 of those CPA licenses were original licenses • 53 of those CPA licenses were based on reciprocity. • There were no Accounting Practitioner licenses issued by the Board in 2010, but, as of the July 18, 2011, Board meeting, there has been one issued thus far in 2011.

  15. SC Board of Accountancy Oath Ceremony • Twice each year, in May and November, the South Carolina Board of Accountancy, in conjunction with SCACPA, hosts an oath ceremony for newly licensed accountants in the state. • In May 2011, SC State Comptroller, Richard Eckstrom, CPA administered the oath as the highest ranking elected CPA in the state. • While not mandatory at this time, licensees who participate often express that the experience is meaningful to them.

  16. Firm Registration • Regulation 1-05(A) A licensee who offers to engage in the practice of accounting on behalf of any person other than the organization in which the licensee is an officer, employee, partner, member or principal must apply for registration as a firm or be employed or associated with a registered firm. • This includes sole practitioners • This includes tax and bookkeeping firms where the owner is a licensee and is holding him or herself out to the public as such

  17. Firms with multiple locations • Only one location must be registered with the Board and renewed annually (after the January 31, 2013 expiration date) • All other locations are to be reported to the Board at the time of initial registration, renewal, or as they open. • A firm location which was once separately registered will now show up on the Licensee Lookup as “Consolidated” unless it is the registered location.

  18. License Renewals • After the January 31, 2013 expiration date for current SC Certified Public Accountant, Public Accountant, Accounting Practitioner, and Firm licenses, renewals will return to an annual schedule • Licenses must be renewed before February 1 • The CPE Reporting calendar will remain the same • January 1 through December 31

  19. CPE • Rules outlined in Regulation 1-08 • 40 hours annually (January 1 – December 31) • Self study limited to 20 hours a year and not eligible for carry-over credit (effective 6/25/2011) • Personal Development hours limited to 8 hours a year and not eligible for carry-over credit • Credit for teaching university or college classes limited to 25% of the required hours per reporting period (effective 6/25/2011) • No more than 10 hours can be earned in a calendar day (effective 6/25/2011)

  20. Self Study CPE • Limited to 20 hours annually • Not eligible to carry-over from one year into the next • Must be registered under Quality Assurance Service (QAS) • QAS is a division of NASBA • List of QAS providers available at www.nasbatools.com • Biggest issue Board finds when conducting CPE audits is self study which is not QAS

  21. “Lunch and Learn” CPE When a meal is scheduled during the educational period no credit will be allowed unless the schedule provides for fifty minutes of instruction after the completion of the meal. • The meal must be on the tables, and the participants can continue to eat during the presentation. • In most circumstances, this will be, at minimum, about one hour and 15 minutes.

  22. CPE Reporting • Starting 2012, the Board will require licensees to submit CPE Reporting Forms and Certificates of Completion annually. • The deadline for submitting 2011 CPE to the Board is February 1, 2012.

  23. Webinars and Webcasts • Webinars count as live CPE not self study • Only live webinars will count for CPE credit • These have controls in place to ensure that the participants are following the presentation and actively participating • On-demand webinars do not count for CPE credit • Webcasts do not count for CPE credit • Lack the controls live webinars do

  24. CPE Reporting Mistakes • The most common mistakes licensees make with CPE and reporting are: • Submitting self study CPE which is not QAS • Failure to sign CPE Reporting Form • Miscalculating carry over hours • Submitting fractions of an other than in half hour increments • Must round down to the nearest half hour. • Example: 9.8 hours = 9.5 Hours CPE Example: 7.2 hours = 7 Hours CPE

  25. Peer Review • As a condition of firm registration, including firms registered in other jurisdictions, a firm providing the following must enroll in a qualified peer review program: • Audits • Reviews of financial statements • Compilations of financial statements • Examinations of prospective financial statements • Compilations of prospective financial statements • Agreed-upon procedures of prospective financial statements • Examination of written assertions; and • Agreed-upon procedures of written assertions

  26. Acceptable Peer Review Programs • AICPA Peer Review Program • SCACPA Administers the AICPA Peer Review Program in South Carolina • Any other peer review program found to be substantially equivalent to the “Standards for Performing and Reporting on Peer Reviews” promulgated by the AICPA

  27. Peer Review Compliance • A firm must have a peer review completed every three years • Effective 1/1/2009, per new Peer Review standards, Firms must submit one of the following reports to SCBOA: • Pass letter • Pass with deficiency letter; or • Fail letter • This includes peer reviews for firms which are not registered for peer review through SCACPA

  28. Regulation 1-10(D) • A licensee or permit holder shall not employee or associate with, directly or indirectly, a person whose license is revoked or suspended by this Board or by the Board of Accountancy in any other jurisdiction. Employing or associating such a person as an accountant, investigator, tax preparer or in any other capacity connected with the practice of accounting subjects the license or permit holder to discipline by the Board.

  29. Purpose of Regulation 1-10(D) • To keep individuals whose licenses to practice have been revoked by the Board from misleading the public into believing that they are actively licensed in this state. • To keep persons whose licenses are revoked from doing further harm to the p.

  30. Who does Regulation 1-10(D) apply to? • Regulation 1-10(D) only applies to registered firms in the state of South Carolina

  31. Recovering Professionals Program • If you or another CPA, PA, or Accounting Practitioner you know has a problem with alcohol or drug addiction, there is help available through the Recovering Professional Program. • Contact LLR for more information.

  32. Ethics • The Board is currently considering an ethics requirement as part of a licensee’s CPE requirement • 6 hours of ethics every three years • 2 of those 6 hours must be in regulatory ethics

  33. Definition of Ethics • “The principles of right and wrong that are accepted by an individual or a social group; a system of principles governing morality and acceptable conduct; motivation based on ideas of right and wrong; the philosophical study of moral values and rules” - Princeton.edu

  34. AICPA Code of Professional Conduct-Article I • Accountants have an ethical responsibility to: • Clients who use their services • The public • Other accountants • In cooperation to improve accounting and maintain the public’s confidence • “The collective efforts of all members are required to maintain and enhance the traditions of the profession.” - ET Section 52 Article I - Responsibilities

  35. Article II – The Public Interest • “Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate commitment to professionalism.” • This includes clients, credit grantors, governments, employers, investors, the business and financial community, and others who rely on the objectivity and integrity of accountants to maintain the orderly functioning of commerce • Act with integrity • Act in a way that best serves your clients’ interests • Must dedicate yourself to the public and act selflessly

  36. Article III - Integrity • “It is the quality from which the public trust derives and the benchmark against which a member must ultimately test ALL decisions.” • When no one is looking • When profit seems ethical • When no rules or guidance is available • When faced with conflicting opinions • Is it that easy? • Ethics is not an option of convenience and not all situations present themselves as a Win-Lose, Right-Wrong

  37. Article IV – Objectivity and Independence • Be impartial • Intellectually honest • Free of conflicts of interest • Continuing assessment of client relationships and public responsibility to avoid impairing independence • If not in public practice, one should still maintain objectivity

  38. Article V – Due Care • The quest for excellence • Perform services to the best of your ability • Promptly • Carefully • Thoroughly • While observing applicable technical and ethical standards • Continually strive to improve QUALITY of services rendered

  39. Article VI – Scope and Nature of Services • “A member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.” • Principles should be considered in determining what services should be offered in differing circumstances • All decisions are circumstantial and will require some professional judgment. • Right and Wrong are subjective concepts that vary within communities, cultures, and even organizations

  40. Questions to ask yourself… • Does my firm have in place quality control standards and procedures? • Competent delivery of services • Adequate supervision over all levels • Would the scope and nature of service provided to an audit or review client create a conflict of interest? • Is this individual activity consistent with my role as a professional? • Is it legal? • Is it balanced? • Is it right?

  41. How can you be more ethical? • Know the truth (FACTS) and establish a set of goals • Understand the client and the situation to be able to develop choices • Abundant resources • Consider the consequences of every decision • Having an ethics policy at work is not enough • Train and communicate to all employees (Tone at the Top)

  42. Proposed Legislation for 2012 • Include engagements performed in accordance with international accounting board standards within meaning of “attest” • Require annual renewals by February 1 • Add section for reinstatement provisions for Accounting Practitioners • Statute change to allow the Board to make exceptions in cases of late individual and In-State firm registration. Authority to grant extensions.

  43. Proposed Legislation for 2012 • If a candidate for licensure passes the CPA Exam more than three (3) years before date of licensure, the candidate must take 120 of current CPE acceptable to the Board before licensure. • CPE ethics requirement, 6 hours every three years, 2 hours regulatory ethics.

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