State Board Report
The NASBA "Guiding Principles of Enforcement" are going to be used to determine whether Boards’ enforcement practices are substantially equivalent, Stacey L. Grooms, NASBA Manager of Regulatory Affairs, reported to the Annual Meeting. In addition to promoting confidence in enforcement practices by Boards across the country, the substantial equivalency evaluation is necessary to assist the California Board of Accountancy in meeting the provisions of its mobility law (Code 5096.21) that require other jurisdictions’ enforcement practices be substantially equivalent to either California’s enforcement practices or the NASBA Guiding Principles in order to continue offering "no notice/no fee/no escape" mobility to CPAs in those jurisdictions. The Guiding Principles were developed based on information collected by NASBA from the State Boards regarding their current enforcement practices.
In January 2016 NASBA will submit to the California Board its initial determinations, with the final determinations being submitted in September 2016. Then in March 2017, the California Board will review the information to determine whether those jurisdictions which are not substantially equivalent should be removed from mobility in California. NASBA will continue to work with Boards to meet the objectives of the Guiding Principles before the California Board initiates rulemaking in July 2017 to remove non-substantially equivalent jurisdictions from mobility. Ms. Grooms said rulemaking typically takes 12-18 months.
The California law also requires that a Board’s disciplinary data be available on-line, either via the Board’s licensee look-up tool or through CPAverify, with a "flag" indicating disciplinary history. Maria L. Caldwell, NASBA’s Chief Legal Officer and Director of Compliance Services, assured the Annual Meeting that NASBA would be reaching out to those Boards that do not currently have such indicators.
NASBA has opened up lines of communication to increase referrals to the State Boards from other Boards and state and federal agencies, Ms. Grooms explained. Coordination efforts with the Department of Labor (DOL) have increased the referrals being sent directly to the Boards. NASBA is also distributing the IRS issued Preparer Tax Identification Number listings, Employee Benefit Plan audit listing, and Federal Clearinghouse listings. Quarterly Enforcement Reports are compiled by NASBA and distributed to notify Boards of actions by other agencies that may require enforcement action by their Board. The Quarterly Enforcement Reports reflect publicly available discipline reported by the IRS, SEC, PCAOB and AICPA.
NASBA’s research into the audit deficiency referrals made by the DOL in the past showed that of 145 audit quality referrals made by the DOL, 132 went to the AICPA and only 13 were sent to the Boards of Accountancy. Over 65 percent of those handled by the AICPA were concluded with the issuance of confidential required corrective action (RCA) letters, Oklahoma Accountancy Board Executive Director Randall A. Ross pointed out. Going forward, all DOL referrals are to be made jointly to the Boards and the AICPA, and NASBA has asked the Boards to identify the appropriate Board contacts to receive those referrals. This past quarter (July-September 2015) the DOL sent 19 referrals to the Boards and NASBA is checking with the Boards to confirm that the matters were received, Ms. Grooms said, and to discuss the availability of the DOL audit review file (including DOL findings) if a DOL approved consent form is obtained.
The AICPA/Board of Accountancy Cooperative Enforcement program was described by AICPA Professional Ethics Division Director Lisa A. Snyder as a "win-win situation for all," allowing the AICPA, Boards of Accountancy and NASBA to demonstrate their commitment to audit quality and providing efficiency, by sharing the AICPA’s investigative files and conclusions with the Boards. Boards should send a letter to the licensee notifying him or her of receipt of the referral and request the licensee provide consent for the AICPA to share its information with the Board. Ms. Snyder explained that the Board would defer its investigation until the completion of the AICPA investigation, and would need to reach its own conclusions and determine sanctions following receipt of the investigation file and findings.
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