Presentation on theme: "New Accountancy Regulations Virginia Board of Accountancy (VBOA) Summary of Key Changes Effective September 16, 2010."— Presentation transcript:
New Accountancy Regulations Virginia Board of Accountancy (VBOA) Summary of Key Changes Effective September 16, 2010
Accountancy Statutes Chapter 44 (§ et seq.) of Title 54.1, Code of Virginia Comprehensively revised effective July 1, 2007 Accountancy Regulations To conform with the 2007 revisions of the accountancy statutes, the regulations were replaced with new regulations effective September 16, The new regulations are in Chapter 22 of Agency 5, Title 18 of the Virginia Administrative Code (18VAC5-22). 2 January 2011
3 Changes to the Regulations Made compliance easier and provide flexibility. Reduced the regulations from 26 pages to 9. Conformed the language of the regulations to the revised accountancy statutes. Clarified guidance in prior regulations carried forward. Eliminated outdated wording and inconsistencies. Eliminated definitions: all definitions are contained in one place in the accountancy statutes. Did not change fees.
Changes to the Regulations, continued Summary of Key Changes only looks at some of the new regulations. A separate Overview of the Accountancy Regulations that became effective September 16, 2010: o Presents each of the 17 sections of the new regulations and a general explanation of each section and o Provides in an appendix the framework for determining when a holder of a Virginia license is required to obtain continuing professional education, including a roadmap and practical illustrations. 4 January 2011
5 When a License Is Required A person uses the CPA title in Virginia, or Attest services or compilation services are provided to persons or entities located in Virginia. o Only a firm can provide attest or compilation services to persons or entities located in Virginia per § , Code of Virginia. o A firm can be comprised of one person (i.e., sole proprietor). If providing attest or compilation services, the person must have both an individual and a firm license.
6 January 2011 Persons or Entities Located in Virginia 18VAC A person is considered to be located in Virginia if his primary residence for federal income tax reporting is located in Virginia. An entity is considered to be located in Virginia if it conducts any activities in Virginia.
7 January 2011 Providing Services While Using the CPA Title 18VAC A person must have a license to use the CPA title. If a person uses the CPA title, the public has the expectation that the CPA is currently licensed. Passing the CPA examination without obtaining a license does not allow a person to use the CPA title. To do so is considered unlicensed activity and subject to enforcement actions (including monetary penalties) by the Board. Persons using the CPA title in Virginia must comply with the standards of conduct and practice prescribed by § , Code of Virginia. Holding a Virginia license constitutes using the CPA title in Virginia.
8 January 2011 Providing Services While Using the CPA Title, continued A person who holds a Virginia license: o Is providing services to the public using the CPA title if he provides services that are subject to the guidance of the standards-setting authorities listed in the standards of conduct and practice in § , subdivisions 5 and 6, Code of Virginia. o Is providing services to an employer using the CPA title if he provides to an entity services that require the substantial use of accounting, financial, tax, or other skills that are relevant, as determined by the Board. Whether a person who holds a Virginia license is subject to the continuing professional education requirement depends on whether he provides services, rather than whether he tells the person or entity for whom he provides services that he is a CPA.
9 January 2011 Principal Place of Business 18VAC Reasonable judgment is required to determine whether Virginia is the principal place of business. The determination: o Should be based on facts and circumstances; o Can be based on quantitative or qualitative assessments; o Can be based on revenues, number of clients, or other factors; and o Does not change due to temporary fluctuations. An individual is subject to the accountancy statutes and regulations if: o His principal place of business is not in Virginia and o He provides services to persons or entities in Virginia.
10 January 2011 Required Education 18VAC New regulation makes permanent the temporary regulation that was effective May 14, Taking the CPA examination requires obtaining from an accredited institution or the National College: o At least 120 semester hours of education; o A baccalaureate or higher degree; and o An accounting concentration or equivalent. Licensure requires 150 semester hours of education.
11 January 2011 Continuing Professional Education (CPE) 18VAC There is no change to: o Total number of hours of CPE required; o Amount of CPE that may be obtained from preparing and making presentations - maximum of 30 hours for each 3 calendar-year period; o Amount of CPE that may be obtained through writing material that is relevant, formally reviewed, and published (no limit); and o An hour of CPE is generally accepted nationally to consist of 50 minutes. New 18VAC requires persons who release or authorize the release of reports on attest services or compilation services to obtain at least 8 hours each year of CPE related to attest services or compilation services (beginning in calendar year 2011). This does not increase the total number of hours of CPE required.
12 January 2011 CPE, continued Whether a person who holds a Virginia license is subject to the CPE requirement depends on whether he provides services, rather than whether he tells the person or entity for whom he provides services that he is a CPA. A licensee who did not provide services to the public using the CPA title or to an employer using the CPA title during the current calendar year, for example, because of retirement or a career “break”: o Is not required to have obtained CPE during the 3 calendar-year period ending with the current calendar year; o Can still use the CPA title; and o Is subject to a catch-up provision before beginning to provide services.
CPE, continued Depending on the facts and circumstances, taking the annual ethics course acceptable to the board of accountancy of another state in which the individual holds a license may be sufficient. When in doubt regarding CPE, consult with the VBOA staff. 13 January 2011
14 January 2011 Experience Qualifications 18VAC Requires that experience be obtained over a period that is the full-time equivalent of one year and does not specify a minimum number of hours over a prescribed period. Clarifies the Board’s intention that the experience must involve the substantial use of accounting, financial, tax, or other skills that are relevant. Clarifies the Board’s intention that experience be obtained through mentoring and that self-employment experience of any type does not qualify.
Owners of Firms Who are Not Licensed 18VAC Must participate in the firm’s activities on a regular, continuous, and substantial basis. Determination should be based on facts and circumstances. 15 January 2011
16 January 2011 Persons Who Release or Authorize the Release of Reports on Attest Services or Compilation Services 18VAC Eliminates the previous additional one-year experience requirement. Requires these persons to obtain at least 8 hours each year of CPE related to attest services or compilation services. This does not change the amount of CPE required. The hours obtained are considered in determining whether the person has complied with the CPE requirements of 18VAC
Persons Who Release or Authorize the Release of Reports on Attest Services or Compilation Services, continued Firms must establish policies and procedures regarding competencies these persons should possess: o Technical proficiency; o Familiarity with the industry and the person or entity; o Skills that indicate sound professional judgment; and o Other competencies necessary under the circumstances. 17 January 2011
18 January 2011 Monitoring Program and Peer Review 18VAC Requires the firm to comply with all components of the monitoring program in which it is enrolled. When requested, firms must provide proof of enrollment in a monitoring program and copies of reports and other documentation related to acceptance of their peer reviews (18VAC ).
19 January 2011 Confidential Consent Agreements 18VAC The Board has the option of entering into a confidential consent agreement if the violation: o Was not intentional misconduct; o Was not the result of gross negligence; and o Did not have a significant financial impact on persons or entities. There can be no more than two additional confidential consent agreements with the person or firm within ten years after the first confidential consent agreement. The Board is not required under any circumstances to enter into a confidential consent agreement.
20 January 2011 Communication Between the Board and Licensees 18VAC Establishes 3 categories of requests for information that require compliance: o Support for the conclusion that the person or firm has complied with the requirements of applicable statutes and regulations; o Proof of a firm’s enrollment in a monitoring program and copies of reports and other documentation related to acceptance of its peer review; and o Documents related to the Board’s investigation of the possible violation by a person or firm of provisions of the accountancy statutes or regulations.
Communication Between the Board and Licensees, continued ■Establishes the presumption that renewal notices will be transmitted electronically unless a person is unable to communicate electronically. ■Clarifies that the accountancy statutes place the responsibility for renewing a Virginia license on its holder and that responsibility is not affected by whether the holder receives a license renewal notice. 21 January 2011
22 January 2011 VBOA Contact Information 9960 Mayland Drive, Suite 402, Henrico, Virginia (804) (office) (894) (fax) ( ) (website) Office hours are 8:15 AM to 5:00 PM, Monday through Friday, with the exception of state holidays