Rule No. 1: Know what the rules are

Jul. 31, 2017  |  Faye Hayhurst, CPA

I would like to blame someone else or “the system,” but it was my own fault.

I was recently married when I first left Minnesota with my new husband. Three years later, we were on our third move and living on the west coast. Correspondence from the Minnesota Board of Accountancy (BOA) found me there, asking what I wanted to do about my Minnesota certificate.

I was too busy to deal with that question, I thought, and since I was certain I’d never move back to Minnesota, ignoring the correspondence was easy to do. Then, just six years later, I was once again living in Minnesota and wanting to get an active Minnesota CPA certificate. That’s when I found out there are consequences to ignoring the rules.

I’d wager that every CPA is aware of authoritative literature to which they need to pay attention. Top of mind are probably tax law, accounting principles, and audit and financial reporting standards. And there are many other pronouncements, laws and rulings we need to track to make sure our business (or a client’s business) stays on the right side of the law.

But statutes and rules governing the profession tend to be more on the back burner for most CPAs.  Statutes are the state law, which are created through the legislative process. Changes to the statutes governing CPAs don’t happen often. Rules, on the other hand, are considered administrative, and are written and changed without legislative involvement.

The BOA writes the rules, and periodically -- usually every few years -- proposes revisions to address changes in the world, the profession, other standard-setters, etc. Before any changes take effect, they are exposed for public comment. That’s where the MNCPA comes in.

Geno Fragnito, the MNCPA director of government relations, stays in close contact with the BOA and delves deeply into all BOA proposals. I had a chance to be involved this year because I am responsible for the MNCPA’s peer review administration, and several of the proposed changes were to rules related to CPA firms having an initial peer review. I, along with others, helped draft comments responding to the BOA’s recent rules proposal.

My brief exposure to the rule-writing process gave me a fresh appreciation both for my colleague in his ongoing diligent efforts with the BOA, and for the BOA staff and advisers involved in writing the rules. Getting the language just right is not easy.

We’re working with the BOA to promote clear rules that coincide with what’s best for both the profession and the public interest. We also work to share information about the BOA and rules that affect our members. But I encourage every CPA to gain their own familiarity with state rules.

Here are a few of the questions that are answered in the rules:

  1. What is the deadline for responding to BOA correspondence? See 1105.1200.
  2. How long does CPE documentation have to be maintained? See 1105.3200.
  3. In what situations is a sole proprietor required to have a firm permit? See 1105.4200.
  4. What is the timing for filing peer review documents with the BOA? See 1105.5400.
  5. On what grounds can the BOA take enforcement action against an individual or firm? See 1105.5600.

State rules may not affect your everyday work life, but they’re important to be aware of. Falling out of compliance can cost time, energy and money. I found that out the hard way. I’ve been back in the BOA’s good graces for 20 years now, and I don’t intend to let that situation -- or any other noncompliance issue -- happen again.

Learn from my mistake, pay attention and follow the rules!  

Topics: Professional certification, Regulation

Faye Hayhurst, CPA

Faye Hayhurst is the MNCPA director of finance and administration. She is committed to using numbers to tell relevant stories, although she also employs words, charts and occasionally clothing to communicate a message. While some have questioned her about the pressures of being the CPA for the MNCPA, Faye considers presenting financial information to fellow CPAs a dream job. Outside of storytelling with numbers, Faye enjoys directing her church's handbell choir, visiting national parks and other scenic places, and checking out the chocolate products at Trader Joe's. Faye can be reached at 952-885-5540 or

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