The Account Balance - Newsletter of the Maryland Department of Labor, Licensing and Regulation - Board of Public Accountancy

Chairman's Welcome!
Thomas S. Chambers

Thomas S. Chambers, Chair, Board of Public AccountancyWelcome to the inaugural issue of The Account Balance, the quarterly e-newsletter from the Maryland State Board of Public Accountancy!

Members of our profession have to routinely cope with all sorts of changes to their business environment, whether it is in tax law, professional standards or technology. We at the Board realize how difficult it can be to keep up with these constant changes, so we have started this e-newsletter to help you stay informed about changes to the law and regulations that have an effect upon your license and your privilege to practice certified public accountancy in the State of Maryland.

We will also endeavor to make you aware of changes that are happening in other areas of the country that may result in changes within our State. For example, elsewhere in this newsletter, you will find an article that discusses the “120/150 concept” which various other states have adopted to allow students to sit for the CPA exam prior to completion of the 150 hours of education required for licensure.

We, at the Board, hope that you will find this and subsequent newsletters to be helpful and informative. We also welcome your suggestions for future topics of interest.

what is mobility?

Maryland and many other states have embraced the concept of “CPA mobility,” a term that means that a person who is licensed as a CPA in one state can practice in another state without having to get another license.  An individual who is licensed as a CPA in another state and whose principal place of business is located in another state may provide CPA services in Maryland without notice, payment of a fee, or obtaining a license. (Note: the CPA's out-of-state firm must hold a valid Maryland CPA permit.) An individual who is licensed in another state, but whose principal place of business is located in the State of Maryland, will still be required to obtain a license from the Board. However, sole practitioners who are licensed in another state, with a principal place of business located in another state, may only provide CPA services in Maryland through a firm that has been issued a permit or by applying for a firm permit themselves. Licensed CPAs who provide CPA services in Maryland through “mobility” are required to comply with the provisions of the Maryland Public Accountancy Act and all applicable regulations. The Board retains disciplinary jurisdiction over these individuals, and an out-of-state CPA who is disciplined by the Board also faces possible disciplinary action in his or her home state.  Firms located in another state that want to provide CPA services for a client in Maryland must obtain a firm permit. For a more thorough discussion of mobility, click here.

Task Force Examines Merits of Exam Qualifications at 120 Semester Hours; 150 Semester Hours Still Needed for Licensure 

Public Accountancy students

A Board committee is nearing completion of a study to determine whether state law should be changed to permit individuals to qualify to sit for the Uniform CPA Examination upon earning a bachelor’s degree in accounting and completing at least 120 semester hours. Currently, Maryland law allows applicants to take the exam only upon the completion 150 semester hours with a bachelor’s degree in accounting or its equivalent.

The Task Force to Study the 120/150 Hour Concept was established in November and is comprised of Board chairman Thomas S. Chambers, education member Raymond C. Speciale, and consumer member Marjorie Root. It was created in response to many state boards’ adoption of the “120/150 concept,” a policy of permitting individuals to take the Uniform CPA Exam with at least 120 semesters hours, but requiring 150 hours for licensure.

According to Chairman Chambers, “The Board will not consider a reduction in the number of semester hours needed to qualify for a license. A national consensus has emerged that 150 hours of college or university study is the standard education requirement for the issuance of a CPA license.” He adds that the purpose of the Task Force’s work is to consider whether permitting accounting students to take the CPA exam as soon as possible after graduation is good public policy that benefits students, CPA firms and consumers of CPA services. 

The Committee has reached out to education, industry and student stakeholders to obtain their thoughts about changing the requirements for the exam. On March 14, a meeting was held with 24 accounting department chairs, representing a cross-section of public and private institutions and four-year as well as community colleges. On April 7, the task force met with a group of current students and recent graduates to gain their perspectives on the 120/150 discussion. In conjunction with the Maryland Association of Certified Public Accountants and the Maryland Society of Accountants, the task force has conducted surveys of their membership and executives of Maryland CPA firms.

Maryland has required the completion of 150 semester credit hours to qualify for the exam since July 1, 1999. Any change in the current requirement will need the approval of the Maryland General Assembly and signature of the Governor. The task force is expected to make recommendations to the Board this spring. For more information on the 120/150 concept, click here.

Attention All Future Exam Applicants!

Two new content areas will be added May 18, 2009 to Group 2 of the Course Requirement Checklist: Quantitative Analysis and Computer Information Technology Systems. All candidates must complete a minimum of 21 semester hours (32 quarter hours) in five of the seven content areas (the others are Statistics, Corporate or Business Finance, Management, U.S. Business Law, Marketing, Economics, and Business Communication), in addition to the requirements of Groups 1 and 3. Download the Course Requirement Checklist (Word document, 133KB, download Word view for free, and keep track of your classes!  

Additionally, when submitting your application to sit for the CPA exam, transcripts are required from each school you have attended. Transfer of credit will not be accepted—while your credits from University A may have transferred to University B, but we still need transcripts from both schools to evaluate your application. (On a related note, if you plan to enroll in an exam review course, please do not do so until you receive your approval letter!) Foreign applicants, please note that your credentials must be submitted by an independent evaluation service specifically for the purpose of taking the Maryland CPA exam before we can review them. You can find a comprehensive list of such services here.

Active or Inactive Status?

As an active CPA, you might choose to place your license on inactive status for one of two primary reasons:

  • You haven’t completed your CPE in time to renew your license, so you choose to change your status to inactive until you bring your CPE up-to-date and you pay the reactivation fee.
  • You’re out of public practice and don’t need to maintain active status, but you don’t want to let your license lapse.

As an inactive CPA, you cannot perform audit or attest services or represent yourself as a CPA in any way. Click here to change your status, address, or any other information.

There is a difference between “inactive status” and “expiration of license.” Inactive status preserves your ability to reactivate your license without the imposition of the $120 reinstatement fee. If you let your license expire, you are required to pay all delinquent license fees and pay the reinstatement fee.

 

Peer Review 101

Maryland now requires a completed Peer Review for certain license renewals after September 30, 2008. However, as soon as the new Peer Review requirements became effective in Maryland, the AICPA issued a revised set of standards. These revised standards actually make things a little easier for firms, especially smaller firms that do not perform any audits. The AICPA did us a huge favor and produced a white paper that does an excellent job of explaining the changes that were made: a PDF is available (PDF document, download Adobe Acrobat for free). Be sure to browse some of the AICPA’s other Peer Review resources.

Individual licensees and firm permit holders are required to certify at the time of renewal whether they performed peer-review mandated services. If they have not, they only need answer “no.” If they answer “yes,” they will be required to provide details on a peer review report form.

The law requires you to complete the peer review certification form with your renewal. Failure to complete this form, whether you provide services that require you have a peer review or not, may jeopardize your license or permit.

Congratulations, Successful Exam Candidates!

We’d like to extend a welcome to the 87 applicants who passed the CPA Exam during January and February! The pass rate for this exam window averaged 50.7%, with a high score of 98%. If this trend continues, we can expect 348 successful candidates over the next three quarters. Compare that with recent years: 291 (2008), 236 (2007), 194 (2006) and 166 (2005). These newly minted professionals are entering an exciting time in the CPA world, and we couldn’t be happier to have them practicing in Maryland. Click here for the pass list, and tell your friends!

Legislative Update

With the recent close of the legislative session come several important developments for CPAs:

  • H.B. 1440 authorizes the Board of Public Accountancy to reinstate a firm’s expired permit once a reinstatement fee is paid, effective October 1, 2009.
  • S.B. 128/H.B. 69  removes the limit on the number of CPE hours that can be earned through self-study or as a teacher/instructor during each license term. All 80 hours of CPE may be earned in this manner, effective October 1, 2009.
  • S.B. 204 modifies Maryland law to be consistent with the 2009 AICPA Standards on Performing Peer Reviews, effective June 1, 2009. (See our article on peer review in this issue.)

Licensees: Request a Verification of Licensure Online
It’s convenient, easy and faster than regular mail!

It’s easy to get a verification of licensure and examination scores to use to get licensed in another state. The Board’s license verification system contains all the information about your Maryland license status that any other state board of accountancy needs to approve your license application. Order your verification online quickly and easily. Payment is by credit card ($25.00 fee is payable by credit card). Your verification will get to where it needs to go faster than a request through regular mail!

Meet Bert Fenwick

Bert Fenwick and Alicia CoarYou may not know him, but if your CPE has ever been audited, then he certainly knows you! Leonardtown, Maryland native Bert Fenwick received his CPA license in 1958 has been the Board of Public Accountancy’s CPE Consultant for 35 years. Now retired from public practice, Bert reviews any CPE credits that are brought up for audit to ensure that they meet Board standards; he also handles technical accounting and auditing complaints. As he whittles down massive stacks of paper into audit results, Bert is ably assisted by Office Secretary Alicia Coar.

 

Do We Have Your Number?

Do we have your number?

Or email address, for that matter? Make sure your contact info is up-to-date, or you’ll miss out on all the valuable information in The Account Balance. The Board also mails a renewal notice to your last known address 60 days prior to your license expiration date; five days prior to expiration, an email notice with a renewal link is sent to you. If you miss the renewal deadline for any reason, the late fee is non-negotiable!  If you let your active CPA license lapse, the reinstatement fee is $120 in addition to the $80 renewal fee. There are no fee waivers. This is a matter of professionalism. If you fail to renew your driver’s license and get pulled over, would you expect the officer to take into consideration the fact that your license “just expired last week”? For a full list of fees, click here. Update your contact information (including home and email addresses) here—just make sure you have your registration number handy for log-in. You may change any info except your Social Security Number or name. Thanks for keeping in touch—email us at cpa@dllr.state.md.us and let us know what you’d like to see in the newsletter!

Spotlight on Code of Professional Conduct

Each issue, we’ll highlight a topic under the Code of Professional Conduct.  This issue’s focus is on:

COMAR 09.24.01.06 H. Responsibilities to Clients; (3) Return of Client’s documents

Any document you receive from a client belongs to the client.  Any record that a client or the client’s representative gives to you so that you can provide a service must be returned upon request. If it’s not yours and the client asks for it, give it back.

Other records that you are required to give a client or former client are copies of tax returns, reports that you prepared and issued for a client, and any of your working papers that would normally be part of the client’s records. Failing to return a client’s records is an act the Board views as being discreditable to the profession, and as such an act that reflects adversely on the licensee’s fitness to engage in the practice of public accountancy.

To view the regulation verbatim, click here

Bonus Spotlight: Responding to Board Communications

Another issue we’ve encountered lately is the failure of licensees to respond to Board communications. As COMAR 09.24.01.06 I. (5) clearly states, “A licensee shall respond in writing to any communications from the Board requesting a response, within 30 days of the mailing of these communications, by registered or certified mail, to the last address furnished to the Board by the licensee.”  Tax season is no excuse—we’re all busy! For an example of what could happen should you fail to respond keep reading.

Disciplinary Actions

CPAS-07-0012, and CPAS-07-0029, CPAS-07-0037, CPAS-07-00562: John C. Meyers, Jr. (Lic. No. 01- 20051), REVOKED and FINED $1,000 for the violation of Business Occupations and Professions Article, Annotated Code of Maryland, Section 2-315(a)(1)(xii) and COMAR 09.24.01.06(I)(5). Mr. Meyers failed to respond to inquiries during the Board’s investigation of these complaints.

Mr. Meyers was ORDERED to immediately CEASE and DESIST offering or providing any service that amount to the “practice of certified public accountancy”; or any representation to the public, by the use of the title “licensed certified public accountant,” “certified public accountancy,” “public accountant,” or “auditor,” by use of the abbreviation “CPA”, by description of services, methods, or procedures, or otherwise, that he is authorized to practice certified public accountancy in Maryland. Note: Board revocation AFFIRMED on September 30, 2008 by The Circuit Court for Baltimore City.

For a full list of recent disciplinary actions, click here.

Board Members
Thomas S. Chambers, CPA, Chair, Industry Member (Caroline County)
H. Terry Hancock, CPA, Industry Member (Baltimore County)
Thomas J. “Tim” Murphy, CPA, Industry Member (Prince George’s County)
Raymond C. Speciale, Esq., CPA, Education Member (Frederick County)
Marjorie A. Root, Consumer Member (Frederick County)

Ella H. Pierce, Consumer Member (Baltimore City)
Muhammed A. Khan, CPA, Industry Member (Baltimore County)

Division Personnel
Stanley J. Botts, Commissioner, Occupational & Professional Licensing
Harry Loleas, Deputy Commissioner, Occupational & Professional Licensing 

State Board of Public Accountancy Staff
Dennis L. Gring, Executive Director
Matthew A. Lawrence,
Board Counsel
Linda L. Rhew,
Administrative Officer
Bert Fenwick,
CPE Consultant
Barbara Hardy, Office Service Clerk
Alicia Coar,
Office Secretary
Shannon Davis,
Outreach Coordinator

Department of Labor, Licensing and Regulation / Maryland Board of Public Accountancy / 500 N. Calvert Street / Baltimore, MD 21202

Department of Labor, Licensing and Regulation / Maryland Board of Public Accountancy / 500 N. Calvert Street / Baltimore, MD 21202
 Missed the last issue of The Account Balance? Read it here.