Enforcement: Connecting the Dots Maria L. Caldwell, Esq. Moderator Panelists: Stacey L. Grooms, Esq., Randall A. Ross, CPA, Lisa Snyder, CPA, CGMA

Transcription

1 Enforcement: Connecting the Dots Maria L. Caldwell, Esq. Moderator Panelists: Stacey L. Grooms, Esq., Randall A. Ross, CPA, Lisa Snyder, CPA, CGMA

2 ENFORCEMENT Connecting The Dots MARIA L. CALDWELL, ESQ., CHIEF LEGAL OFFICER & DIRECTOR OF COMPLIANCE SERVICES STACEY L. GROOMS, ESQ., REGULATORY AFFAIRS MANAGER RANDALL ROSS, CPA, EXECUTIVE DIRECTOR, OKLAHOMA ACCOUNTANCY BOARD LISA SNYDER, CPA, CGMA, DIRECTOR, AICPA PROFESSIONAL ETHICS DIVISION

3 Guiding Principles of Enforcement STACEY L. GROOMS, ESQ., REGULATORY AFFAIRS MANAGER

4 s Mission Enhance the effectiveness and advance the common interests of the Boards of Accountancy 4

5 Enforcement Resources Committee Mission Statement PROMOTE EFFECTIVE, EFFICIENT, AND WHERE APPROPRIATE UNIFORM ENFORCEMENT OF PROFESSIONAL STANDARDS BY BOARDS OF ACCOUNTANCY

6 Enforcement Tools Created Enforcement Resources Guide Federal Agencies Series Investigator Training Series Quarterly Enforcement Reports Enforcement Newsletters Investigator/Expert Witness Portals

7 Guiding Principles of Enforcement A distillation of Enforcement Resources Guide and the data collected by NASBA regarding how boards put enforcement efforts into action

8 Referrals & Leverage Boards are receiving more information on disciplinary matters through referrals from other boards, as well as referrals directly from state/federal agencies Recent coordination efforts with the DOL have increased the referrals that are being sent to boards Distribution of PTIN listings, EBP audit listing, Federal Clearinghouse listings, and Quarterly Enforcement Reports are notifying boards of actions by other agencies that may require enforcement action by their board Guiding Principles which are reflective of the enforcement process of most boards may provide boards with leverage to request more resources to improve their enforcement process

9 Mobility Boards should have confidence in the enforcement process across the nation Boards of the home jurisdiction and the mobility jurisdiction need to be equipped to protect their citizens California s mobility law specifically requires the CBA to verify that allowing practice privileges to a CPA from a particular jurisdiction does not violate the CBA s duty to protect the public

10 California (Code ) Verification of enforcement practices of other jurisdictions can be accomplished by: Determination of equivalency with a best practices guideline created by NASBA; or By individual evaluation by the CBA

11 Guiding Principles of Enforcement Survey project began in September 2014 to determine what enforcement looks like among the boards Guiding Principles were finalized May 2015 and adopted by the CBA for use in satisfying their mobility law Communications continue with boards to confirm that enforcement practices meet the objectives of the Guiding Principles

12 Improvement in Disciplinary Data The California law requires that discipline be available online by a flag indicator NASBA will work with boards that do not currently have information available on-line to create a feed for CPAverify/ALD This step improves the disciplinary information that is available to other boards as well as to citizens in all jurisdictions, improving the consumer protection aspect of mobility

13 California s Equivalency Evaluation Timeline Jan 2016 NASBA submits information to CBA on initial determination of SE September 2016 NASBA submits information to CBA on final determinations of SE March 2017 CBA reviews information to determine if non-se jurisdictions should be removed from mobility in CA April 2017 NASBA continues to work with boards to achieve SE status July 2017 CBA initiates rulemaking to remove states from no notice, no fee mobility (rulemaking typically requires months)

14 DOL Audit Quality Study Update STACEY L. GROOMS, ESQ., REGULATORY AFFAIRS MANAGER RANDALL ROSS, CPA, EXECUTIVE DIRECTOR, OKLAHOMA ACCOUNTANCY BOARD

15 DOL EBSA Audit Quality Study Released 5/28/2015 Reviewed 400 plan audits from 2011 Form 5500 filings Six strata using # of audits per firm Random sampled within each strata Analyzed licensing and peer review status as part of study

16 Key AQS Finding Major GAAS Deficiencies - Reject Form 5500 (39%) Compliant or Minor Findings (61%)

17 Trend of AQS Audits with GAAS Deficiencies 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 39% 33% 23% 19% Audits with GAAS Deficiencies

18 Audits Containing 5+ Major Deficiencies and Clean Peer Reports Strata (Audits) Deficient Audits w/ 5+ Deficiencies and Clean Peer Review Report % (33) % (34) % (35) % (14) % (1) % (1)

19 DOL AQS Recommendations NASBA / State Board Related ENFORCEMENT Work more closely with NASBA and State Boards Peer review Refer audit firms without acceptable peer review to Boards of Accountancy OUTREACH Work with NASBA / State Boards to encourage requirement of specific licensing requirements for EBP auditors Communicate results of AQS to all Boards of Accountancy stressing need to ensure only competent CPAs perform EBP audits 19

20 Where We Have Been Since 2005, DOL made 507 routine referrals 481 to the AICPA 89 to BOAs Over 65% of referrals to AICPA conclude with issuance of confidential RCA Letter

21 DOL Audit Quality Referrals DOL has made 145 referrals 132 to the AICPA 13 to BOAs Over 65% of referrals to AICPA conclude with issuance of confidential RCA Letter

22 Outcome of Previous Referral Process DOL is concerned about the current system, but BOAs need to be involved in ALL cases The BOAs had no real insight as to the magnitude of the number of deficient audits

23 What Boards Have Done Actions Taken by Boards of Accountancy Closed with Discipline (26%) In Progress (23%) No Record of Referral (19%) Closed with No Violation (10%) Closed with No Data Available (10%) Closed Due to Insufficient Evidence (5%) Closed with Compliance (4%) Lack of Jurisdiction (3%) Deceased Respondent (2%)

24 Collaborative Effort CPA Firms Accountancy Boards Department of Labor (DOL) AICPA NASBA 24

25 How to Improve Collaboration and Results Improve referral process to ensure the DOL referral information is sent to the appropriate board contact All DOL referrals to be made to the Boards going forward Use of Consents to allow sharing of investigative files with Boards and AICPA by DOL Use of AICPA/BOA Cooperative Enforcement Process AICPA to consider changes to Automatic Sanctioning Guidelines that are triggered upon Board action 25

26 AICPA/Board Cooperative Enforcement Project LISA SNYDER, CPA, CGMA, DIRECTOR, AICPA PROFESSIONAL ETHICS DIVISION

27 Ethics Division Structure Professional Ethics Division staffs the following committees: Professional Ethics Executive Committee IND/BHS Subcommittee TNS Subcommittee Ethics Division consists of: 20 Technical Staff (1 Director, 4 senior managers); 7 Technical Standards (TNS) and 5 Independence/Behavioral Standards (IND/BHS) Technical Managers; 3 Case Investigators 5 Support Staff

28 Conduct of an Investigation Initial review information reviewed to determine if investigation warranted and respondent is a member If investigation warranted: Opening letter (OL) to each respondent inform of investigation and request- Practice information In-depth questions, regarding alleged deficiencies and resolution/remediation Work papers, financial statements and other evidence Confirm peer review notifications made and OL, including complaint/referral, has been provided to firm peer review contact Other information from respondent/complainant (as needed) Gather and examine evidence

29 Financial statements reviewed Conduct of an Investigation Information Considered Working papers reviewed, unless errors are admitted or evident in financial statements Interrogatories may be posed, interview offered Current practice information of respondent and firm: Practice composition Experience in relevant area Relevant CPE States and status of license Self remediation and correction of the error Results of peer review Other investigations Assess threat to public & profession

30 Disposition of DOL Investigations No further action/no further action with comments Failure to cooperate Refer to Joint Trial Board (with charges of non-cooperation and a recommendation of expulsion) (Apparent) Prima facie evidence of a violation

31 Disposition of DOL Investigations Letters of Required Corrective Actions (RCA) Confidential, except: The complainant is informed Copy of the RCA goes to AICPA Peer Review Program Directives may include: Comply immediately with professional standards Attest, where applicable Directed CPE (targeted to violations and to other practice areas if CPE is deficient) Pre-issuance review Follow-up work product review Accelerate peer review Restricted from performing peer review, teaching & committee service Join audit quality center Notify firm s peer review contact and managing partner

32 Disposition of Investigations Settlement Agreements Terms of settlement agreement may include all remedial actions available in RCA, plus: Admonishment Member rights affected Suspension (up to two years) Expulsion Publication of the name of the respondent and possibly his/her firm AICPA website, state society publication, WSJ State board is notified of disciplinary action

33 AICPA/Board of Accountancy Cooperative Enforcement AICPA/NASBA have joined together to promote program to state boards Apply to licensees who are AICPA and/or State CPA Society members Working on approach for non-aicpa/society members on cost allocation basis Focus on DOL & Gov t audit cases Areas where audit quality is at greatest risk Would not extend to commercial & behavioral cases Win-win situation for all Allows AICPA, NASBA and state boards to be proactive and demonstrate commitment to audit quality issue Provides efficiency since AICPA already performing investigation and has ample resources

34 AICPA/Board of Accountancy Cooperative Enforcement AICPA would not perform investigation on behalf of Board AICPA would share investigative files and conclusions with Board Board would defer its investigation until completion of AICPA investigation If Board were to open investigation, licensee has right to defer AICPA investigation Board would reach its own conclusions and determine sanctions State board would request consent letter from licensee Board will defer its investigation due to pending AICPA investigation Upon completion of AICPA investigation, Board will request AICPA provide copies of its investigative files and conclusions Board will commence its own investigation at that time and may take AICPA s investigation, findings and conclusions into consideration Board will reach its own findings/conclusions and may request licensee provide additional info Request licensee provide consent for AICPA to share its investigative files and conclusions with Board

35 AICPA/Board of Accountancy Cooperative Enforcement Examples of investigation material that would be sent to state board: Letter of required corrective action or settlement agreement Investigation summary with committee findings and conclusions If applicable, summary of interview with respondent, along with respondent s comments on the summary. Evidentiary matter considered by committee. Copy of opening letter Copy of letter of inquiry to the firm (if applicable) and copy of response thereto Copies of financial statements and reports

36 QUESTIONS?