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Sep 25, 2017

CPA Regulatory Changes Official: Impact CPE and Experience Verification

By Michael D. Colgan, CEO and executive director


On Sept. 23, 2017, long-awaited new regulations proposed by the Pennsylvania State Board of Accountancy (SBOA) were published in The Pennsylvania Bulletin. With this publication, the two most recent amendments to the Pennsylvania CPA Law (Act 73 of 2008 and Act 15 of 2013) as well as a clarification of civil penalties for CPE violations have been implemented. Included are revisions to the CPE requirements for all licensees and clarification on how a CPA candidate’s experience is verified. The new regulations will be effective Jan. 1, 2018, so they will not impact the current biennial license renewal due Dec. 31, 2017.

Harrisburg capitol buildingWith respect to CPE requirements, the new regulations eliminate the minimum eight-hour tax requirement for all licensees, and will require 24 hours (increased from 16) of accounting and auditing credits only for those licensees participating in attest activities. Licensees not participating in attest activities will have no A&A minimum. The four-hour biennial ethics requirement remains in place for all licensees. These changes allow licensees to select and complete CPE in areas most related to their current professional development needs. The regulations also outline a schedule of civil penalties for licensees who fail to comply with the biennial CPE requirements.

In Act 15 of 2015, a general experience requirement replaces the previous requirement that every licensee obtain 25 percent of his or her required experience in attest services. Under the new regulations, CPA licensees who supervise attest services, and sign or authorize another to sign an accountant’s report for attest services, must meet at least one of the following: at least 400 hours of attest experience within the previous five years and at least 24 hours of CPE in accounting, auditing, or attest during the immediately preceding 24 months of issuing a report; or be a member of, or employed by, a firm registered with the Board that has met the peer review requirements.

The regulations also clarify the types of general experience permitted by Act 15 to meet the requirement for CPA licensure. They clarify who can verify an applicant’s experience: an individual who possesses a current CPA license during the entire period of the verification, either employs or is employed by the same employer as the candidate, or has a relationship approved by the SBOA prior to the period of verification. This final provision provides an opportunity for candidates who work for entities that do not employ another licensee to seek approval from the SBOA to allow a different relationship to verify their experience.

If you would like to review the proposed regulations in detail, you can check out the Schedule of Civil Penalties or the Act 73 and Act 15 Amendments.

If you have any questions or need additional clarification on the new regulations, please feel free to contact me.


Listen to Mike explain the details of the changes, when they will take effect, and what they mean for Pennsylvania CPAs in this CPA Conversations podcast.



19 comments

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  • VINCE GRAHAM | Sep 13, 2018
    Meantime Lawyers in PA only need 24 hours of CLE in a bi-annual period to maintain their license.  Looks like the  PA attorneys have a sensible and manageable process in place.  80 hours is ridiculous - a money maker for the providers and very little added knowledge is gained in the process,
  • Sharon | Mar 09, 2018
    Steve - thanks so much for your response and the link.  This is helpful.   
  • Steve Kerr | Mar 02, 2018

    Sharon: The 20 credit minimum per calendar year has not changed. You still need to obtain at least 20 CPE credits in 2018 and at least 20 CPE credits in 2019 - with at least 80 credits total between the two years. Also unchanged is the cap on individual study (ie. self-study) credits: A maximum of 40 of the 80 total credits can come from individual study courses.

    You can find more info on the requirements on our website (https://www.picpa.org/attend-cpe-events/cpa-cpe-requirements-in-pennsylvania), and the you can also review the CPE regulations in Sections 11.61-11.68a of the state board regulations (https://www.pacode.com/secure/data/049/chapter11/chap11toc.html).

     

    Steve Kerr | PICPA

     

     

  • Sharon | Mar 01, 2018
    I have the same question as some of the others.  I haven't seen it answered.  Is there still a requirement to get a minimum of 20 of your credits in each year?  Or, is it just 80 hours in the reporting period whether it's 20 and 60, 40 and 40 or 0 and 80?  
  • Steve Stojowski | Dec 14, 2017
    If I only have 1 CPE credit from 2016 and well over 80 from 2017 (assuming the proper mix of fields of study), does this mean I am not eligible for licensing in the 2016/2017 biennial years because I don't have at least 20 hours in EACH year? For the 2018/2019 biennial period, do I have to start all over again from scratch? 
  • Michael Colgan | Dec 06, 2017
    Yes.  There is still an 80 hour CPE requirement biennially to maintain an active license to practice as a CPA. The period runs from Jan. 1 of even-numbered years to Dec. 31 of odd-numbered years. The changes to the specific hour breakdowns are detailed in the above post.
  • Andres | Dec 05, 2017
    Does anybody know if the 80 credits over the two year period still apply? (With 40 in each).
  • Mike Colgan | Nov 27, 2017
    Sharon:  the State Board will handle these requests on an individual basis. One example could be a candidate who works in an entity that does not have a current licensee employed in that location but may have a parent company or subsidiary where a current licensee could verify that candidate's experience. The State Board will not function as a group that verifies experience. 
  • Sharon Turchick | Nov 20, 2017

    This final provision provides an opportunity for candidates who work for entities that do not employ another licensee to seek approval from the SBOA to allow a different relationship to verify their experience.

     

    Can you Clarify what other relationships could verify experience or provide a resource that does?  Or, does this mean that the SBOA will look at the work requirements and verify?

  • Jack L. Hess, CPA | Oct 03, 2017

    Absurd! So now CPA's are not required to have any tax CPE, and but increase the accounting and auditing hours to 24 for those licensees participating in attest activities. Auditing and Reviews of for-profit companies all have tax considerations interrelated with their statements. Auditors should have knowledge of taxes.

    Another death blow to the small accounting firms! Already auditing and review work is "check the box", don't do too much, or too little, just follow the rules! Rules for the big company audits & reviews, applied to medium and small firms.  One size fits all!  the PICPA is out of touch with the reality of small accounting firms that do audits and reviews. That makes the costs excessive to many small non-profits, and small companies that need those services.

    Jack L. Hess, CPA 10/3/2017  

      
  • George | Sep 29, 2017

    I love it!  

     

    Now I only need to get 4 hours of ethics, I can get the rest of my CPE watching free seminars from the CPA Academy on "Building My Practice," "Connecting on Linked-In," and "Becoming more Efficient with Firm Billing and Receiving."  That is the same criteria I would expect out of my medical specialist taking CPE when I need a major medical procedure.

     

    Is Donald Trump running the Board of Accountancy and the PICPA now?  In a year they have been talking about overhauling the tax code, you think it is a good idea not to mandate taking tax classes?  Accounting and regulatory standards change constantly, are we to pay this no mind?  Are you seriously trying to set up firms for malpractice or are you not in the profession and are clueless to what the job entails?  I agree not all CPA's do both tax and audit but the exam and certification is based on the understanding of both.  To not have a required minimum to ensure that some education is taking part in these areas is absurd, the requirement had been minimal regardless and at least makes sure that we continue a rounded education.

     

    It is embarrassing that H&R Block has a higher level of requirement to have its employees remain employed and remain qualified to perform their functions and duties than the State requires to maintain this distinguished license. 

     

    I know it is based upon the position that CPA's will "Govern thyself."  That reminds me of the story of the person who logged into the ethics webinar and had their assistant answer the ongoing questions that make sure you are attending so he could get his certificate.  Undermining the system before took at least a little effort before, now you have turned CPE into a joke.

     

    One thing that I am glad about is the audit and attestation requirement was re-implemented.  However, do not agree with the substantial knee jerk methodology in its implementation.  Not all Attestation is subject to peer-review.  Mandating that qualified overseen A&A hours can only be acquired by firms subject to peer-review will hurt the growth of small firms looking to attract and retain talent as well as family run firms trying to pass the single on to the next generation of CPA's. 

     

    You are killing your bread and butter here, all the small firms.  This is a real eye opener to your priorities and agenda.

  • Mike Colgan | Sep 29, 2017
    Malcolm and Peter: The new regulation promulgated by the State Board related to audit experience returns the requirement to where it was prior to Act 15 of 2015, when all candidates for licensure were required to have 25% of their required experience in the attest function. The State Board is responsible to protect the public, and requiring a licensee who is going to supervise or sign an attest engagement to have a minimum of 400 hours of attest experience over the previous five years and 24 hours of A&A CPE credit in the previous 24 months is actually strengthening the requirement and meeting their purpose of protecting the public.
  • Diane E Casey | Sep 28, 2017
    I am also mostly retired but continue to do a small amount of work for two clients.  I have had a license for over 30 years.  The 80 hour requirement is time consuming and expensive for the small amount of work I do.  I am seriously considering relinquishing my license and dropping my two small clients because of the CPE requirements. 
  • Thomas F. McClelland | Sep 28, 2017

    It's amazing to see the CPE requirements both weakened and made worse simultaneously. 

    Good job. 

    Very simiar to allowing people to call themselves Certified *Public* Accountants without ever having to do *public accounting*; yet requiring an extra year of student debt accumulation just to get an accounting degree.

    Weakening the requirements yet amazingly somehow managing to make the requirements worse at the same time.

     

     

     

     

  • Peter S. Kennedy | Sep 28, 2017

    Mr. Smith wrote:

    "Small firms who have not done audits are now not permitted to get back into the auditing business because they don't have the cpe or 400 hours of experience."

    That is a very valid point - I'd like to hear the PICPA's response.

  • Tom L | Sep 28, 2017

    The PICPA does in the small practioner 

    again. Nothing new under the sun.

     

  • Ray Bucks | Sep 28, 2017
    I am so happy that an organization that I have been a member in for over 40 years, yes my license is that old, goes along with continual cheapening of a CPA license.  While you agree to make it easy for new individuals to obtain licenses, you can't seem to figure a way that older CPA's can do a little work without doing 80 hours of CPE.  Can't you see that older CPA's with good records should not endure these stresses.  Maybe 24 hours a year would be a good start.
  • Francis Kilinsky, MS, CPA, CGMA | Sep 27, 2017
    I'm glad I retired!  Over the years I have spent hundreds of wasted hours obtaining my CPE requirements without learning anything I did not already know.
  • C. Malcolm Smith, III, CPA | Sep 27, 2017

    It is very upsetting to see the PICPA support such a decision.  Small firms who have not done audits are now not permitted to get back into the auditing business because they don't have the cpe or 400 hours of experience.  So this is set up to promote the big firms get the audit business. 

    Almost all firms do tax returns, but no tax cpe is required?  But no CPA can do an audit without 24 hours of A&A cpe!  This is a very poor way to look at this and is not an improvement in my opinion. 

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