Keep All Your CPE Certificates of Completion – You Might Be Audited

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By Anne Rosivach

When fulfilling their continuing professional education (CPE) requirements for license renewal, certified public accountants (CPAs) must always remember to keep their certificates of completion, even if their particular state boards of accountancy don't require them to file the forms. State boards routinely audit a random selection of applicants for proof of course completion. Providing incomplete or false information can mean a fine, a reprimand, or the loss of one's license.

New Jersey's The Star-Ledger reported that an audit of New Jersey CPAs for the years 2006-2008 revealed that 4 percent of the CPAs – about 780 of 20,000 – falsely reported they had taken an ethics course that is required by the state. Some of those individuals also failed to prove they had taken other courses they claimed credit for on their renewal reports.

According to documents obtained by The Star-Ledger through the state open records law, the offenders, who were fined from $500-$8,000 for the violations, included local tax preparers, school accountants, a state official, and members of large accounting firms. 

The Star-Ledger wrote, "Joanne G. Diggs, manager of Willingboro Township, completed only 86 of the required 120 credits and was fined $1,500. Diggs said she took a law and ethics course, but not one approved by the board. She also said the board did not allow other credits she had taken."

Most state boards audit applicants after applicant renewals have been granted, so it is crucial for CPAs to maintain their own records. The Missouri State Board of Accountancy states: "Responsibility for documenting the acceptability of the program and the validity of the credits rests with the applicant who should retain such documentation for a period of five (5) years following completion of each learning activity."

According to the California Board of Accountancy, California licensees are randomly selected for a continuing education audit of prior years when their licenses are about to expire. Licensees who have been selected are notified by mail approximately ninety days prior to the date their licenses are to expire. A California licensee selected for an audit must submit the following documentation with his or her license renewal application:

  • Completed license renewal application.
  • Continuing Education (CE) Reporting Worksheet.
  • License renewal fee.
  • Certificates of completion verifying a minimum of 80 hours of qualifying CE, as reported on the CE Reporting Worksheet, were completed during the two-year period immediately preceding your license expiration date.

Worksheet documentation would include the CPA's name, the date, the number of CPE credits per course, the course title, and the CPE provider of the course. Some state boards also require applicants to keep an outline of course content or a course description.

An astonishing 50-60 percent of random audits conducted by the Arizona State Board of Accountancy do not pass the initial committee inspection, either because the documentation was incomplete or because the course outline was not clear. Other reasons for failure to pass inspection in Arizona include:

  • Hours did not add up to the 60- or 80-hour requirement.
  • Less than 50 percent of the required credit hours were taken in the subject areas of accounting, auditing, taxation, business law, or management advisory services.
  • The course taken was not considered continuing professional education.
  • The information submitted did not match the courses listed on the biennial registration form.

In the past, the New Jersey State Board of Accountancy selected about 10 percent of applications randomly to verify their accuracy, said board president, Keith Balla, in an interview with The Star-Ledger. This year, however, it compared applications with the enrollment records of the law and ethics course to better target wrongdoing. "Although the percentage flagged by the audit was relatively small, no accountant who is serious about his work and serving clients effectively should be failing state requirements. It's disheartening to any other licensee that they wouldn't take their education seriously and fulfill that obligation," Balla said.

Many of the accountants audited in New Jersey said during interviews that they intended to complete the requirements before they sent in their renewal forms, but they never got around to it. Some said they didn't understand the requirements.

Perhaps Hayden Williams, CPA and former Arizona Society of CPAs' Director of Finance, says it best: "Remember, you are ultimately responsible for verifying your education." 

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I underwent an audit by the State of Arizona.  Being aware of the possibility of such when I received my license I maintained a binder that contained each of the Certificates of Completion for every course I completed.  I reasoned that a certificate for a NASBA-certified course was sufficient to prove attendance and completion.  And when I was selected for a CPE audit I PDF'd and emailed the certificates to the Board of Accountancy, happy that I had maintained everything in a nice neat package just for this contingency.  However Arizona also requires a course outline or a course syllabus for every CPE class (!) that details the material covered, etc.  This took me much longer to compile because many of the classes I took did not provide either one, or only a skimpy outline. By the time I could pull it together the 30-day window had transpired and they tried to suspend my license.  I attended the hearing and got away with a fine for an untimely response.  Having dealt with Boards in other States I found the Arizona Board to be
excessively stringent in their documentation requirements.  How many people have to provide course
syllabus for CPE certification classes?  I’ve
been told that other State’s regulations require the same degree of
documentation as Arizona does, but in practice they do not request it from
their licensees.