State Board Report
Lee D. Martin, Deputy Director of the Internal Revenue Service’s Office of Professional Responsibility (OPR), and Ian Dingwall, Chief Accountant of the Employee Benefits Security Administration (EBSA), both addressed the NASBA Executive Directors Conference as well as the Legal Counsel Conference in Savannah. Both had been contacted through NASBA’s stepped up outreach program to federal regulators, spearheaded by Executive Vice President Colleen Conrad and assisted by NASBA attorneys Maria Caldwell and Stacey Grooms, who provide staff support to NASBA’s Enforcement Resources Committee. Ms. Conrad explained that the program is working to build staff-to-staff relationships between NASBA staff and federal agency staff, getting those who “work in the trenches” to know whom to call, in that way serving as a conduit for information for the State Boards. She encouraged the Executive Directors to contact her, Ms. Caldwell or Ms. Grooms when they need information from federal agencies or are seeking points of contact. “If we can work with the federal agencies and speak with a common voice, it may help,” she suggested. “We also realize that there are many new Executive Directors and investigative staff throughout the Boards of Accountancy. We are working on adding guidance and tools regarding working with federal agencies in NASBA U, as well as in our enforcement tools.”
Fitness to practice before the IRS is the focus of Mr. Martin’s 40-member department. Approximately two-thirds of the cases they pursue are related to bad conduct, while some 14 percent involve compliance issues, such as the tax professional’s failure to pay his own taxes. Under Circular 230, the IRS can privately reprimand the professional, or can publicly censure, suspend or disbar him, and can assess monetary penalties against an individual or a firm, though it has not done so against a firm, Mr. Martin said. The IRS cannot tell the State Boards what cases they are working on: “What is published is the extent of what we can do,” he told the Executive Directors. In 2012, the Office of Professional Responsibility disposed of 711 cases of which 31 involved CPAs. In 2013, they disposed of 766 cases of which 35 involved CPAs.
There are 82,579 employee benefit plan (EBP) audits being done by 7,358 CPA firms, Mr. Dingwall said, and audit quality remains problematic. A nationwide quality study of 400 EBP audits was started in October and is expected to be completed by September 2014. Based on past experience, half of the CPA firms audit only one or two plans, and those “dabblers” are the ones that are most likely to be deficient because they don’t pay attention to the audit guides, according to Mr. Dingwall. His department has referred more than 800 cases of the most egregious work to the AICPA and about 100 to the State Boards of Accountancy when the firms were not AICPA members. The Executive Directors asked Mr. Dingwall to have his agency refer cases to the appropriate State Board at the same time as they do to the AICPA. He said, when EDs receive the referrals, they will get detailed information along with his department’s summary, and he advised the Boards to ask for the EBSA’s work papers so that they would not have to “re-invent the wheel” to move ahead with the case.
A list of CPA firms that have done EBP audits but have not been peer reviewed is being prepared by the EBSA. Mr. Dingwall agreed to share that list with the State Boards. He said that the Department of Labor supports legislation that would amend ERISA to state the requirements for performing EBP audits and that would give the Department of Labor the authority to bar auditors from ERISA work or to prescribe remediation. When that legislation is written, the EBSA would like NASBA to review it and submit a letter of support if possible , Mr. Dingwall said.
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