March 15, 2021
A major part of maintaining an active Certified Public Accountant (CPA) license is taking the required hours of Continuing Professional Education (CPE), as determined by the state licensing boards. In addition to taking the courses, it is imperative to maintain good records of the CPE courses completed because state licensing boards regularly perform audits of licensee renewals to ensure the active professional is meeting the CPE requirements. Auditing a selection of CPE records supports the goal of ensuring that the public is protected from incompetent, unqualified, or unlawful CPAs.
Each state’s board of accountancy determines the process for auditing CPE records. These boards also set the requirements for maintaining CPE records. If a licensee is selected for audit, documentation supporting the courses taken must be provided within a set time frame, often within 30 days. It is best for CPAs to stay current in tracking their courses so that if they are selected for audit then the process of gathering the necessary information will be easier. So what information should be kept handy in case of a CPE audit? It is likely that the CPE Certificate of Completion issued by the course provider or sponsor will provide the needed information:
- Registrant’s name
- Course provider or sponsor
- Course title
- Credit hours
- Date of completion
The information documented on the certificate will be compared to the list of CPE courses submitted by the licensee. Other information that may be required includes the delivery method of the course, a signature of the plan sponsor, and the address of the course or program attended.
Reasons for Noncompliance
There are numerous reasons why CPE hours could be deemed as unacceptable in meeting the state boards’ requirements. Some of the most common ones include:
- Missing certification of completion – the course is listed by the licensee as completed but no supporting certificate is submitted.
- Missing information on the certificate of completion – the certificate is provided but it is missing one or more of the items listed under ‘documentation’ above.
- Ethics requirements have not been met – each board has a mandated number of ethics hours that must be completed for license renewal. Some boards are very specific in the types of ethics courses required and the number of hours required do vary by state board.
- Required subject hours are not met – some boards require a specified number of hours in the areas of accounting, audit, and taxation. For those working in municipal accounting, there may be a minimum number of CPE hours required in the area of government accounting (referred to as ‘yellow book’ hours).
- Too many non-technical hours are reported – many boards cap the number of non-technical, personal development CPE hours allowed in a license renewal period.
- Unallowable carry-over hours – CPE hours can be carried forward to a future licensing period, but the number of hours is capped, and not all boards allow carrying forward the hours.
The list above is not all-encompassing and serves to show that it is imperative that a CPA document and maintain detailed CPE records for each renewal period. Further, license holders must be familiar with the requirements of their state’s board of accountancy because each board has different requirements.