The CPE audit 1 percent
February/March 2017 Footnote
Every year, active CPAs report their CPE credits to the Minnesota Board of Accountancy (BOA). And, in turn, the BOA selects a percentage of CPAs to verify what they reported.
Ah, yes, the annual CPE audit.
In 2016, the BOA conducted 110 audits for the CPE reporting period of July 1, 2012, through June 30, 2015. That represented 1 percent of CPAs certified in Minnesota, as well as one-third of the BOA's board members.
Of those audited, 33 percent had issues, which ranged from missing documentation to hours reported exceeding the maximum allowed for certain types of CPE.
Knowledge is power. Familiarize yourself with the audit details in case you are a part of the 1 percent this year.
Why does the BOA audit CPAs?
The BOA's annual CPE audit protects both the accounting profession and the public it serves. It ensures that CPAs are staying abreast of the rules and regulations vital to their roles in firms and companies.
When does the BOA audit CPAs?
There is no hard and fast date for when the annual CPE audit begins each year. Instead, it's initiated after tax season officially ends. The date can vary if tax season is extended.
How are CPAs chosen for a CPE audit?
With the exception of one-third of the BOA's board members being audited annually, individuals are chosen randomly using an automated computer system.
What can I expect if I'm chosen?
A CPE audit notification letter is sent from the BOA. Upon receiving this letter, you have 30 days to respond to the BOA. Responding is not optional.
Your response should include:
- A copy of the CPE reporting form sent to you by the BOA.
- Supporting documentation for each CPE course taken in the three-year reporting period under review.
What if I made a mistake?
CPAs are assessed a monthly noncompliance fee until the mistake is fixed, so address the error as quickly as you can. Discover that you're now short on CPE? You'll have to make up the difference. In addition to these noncompliance fees, you may also be disciplined for failing to comply with CPE requirements.
Mistakes happen, including these common offenders:
- Short on CPE, including ethics or NASBA-approved credits
- Counting non-QAS courses toward self-study hours
- Applying undocumented credits toward the total
- Recording CPE credits in the wrong year
- Misreporting carryback credits
- Missing documentation for nonapproved courses
CPA certification is regulated by the BOA. Reach them at 651-296-7938 or www.boa.state.mn.us.
The MNCPA is here to help. Reach out with questions about the annual CPE audit or CPE reporting at 952-831-2707, ext. 2, or visit www.mncpa.org/cperules.
Understanding automatic revocation of firm permits
Firm permit renewal underwent a rule change in 2015. This rule now requires two-thirds of a firm's CPA owners, partners, shareholders, members, managers, directors and officers to renew by Dec. 31, and 100 percent to renew by March 1.
If your firm has a CPA who does not renew properly by March 1, 2017, your firm's permit will be automatically revoked. No prior notice of the revocation will be given.
Even if you renewed your firm permit on time, it will still be revoked if your CPAs' licenses are not in compliance. What will happen if your firm permit is revoked:
- It will be on public record.
- You cannot perform compilations, audit and other attest services.
- You cannot apply for a new permit until the next BOA meeting in April.
Moral of the story: Be sure to follow up with the CPAs in your firm to ensure everyone renews correctly.