Published October 7, 2011

A&A Update

Pershing Yoakley & Associates, P.C. is pleased to present the September 2011 Audit & Accounting Update. It is designed to provide direct access to current audit and accounting information that is relevant to you.

AICPA Activities

Exposure Drafts

The American Institute of Certified Public Accountants (AICPA) has issued jointly with the National Association of State Boards of Accountancy (NASBA) an Exposure Draft (ED) which is summarized below.

Statement on Standards for Continuing Professional Education (CPE) Programs

As stated in the ED, CPE is required for Certified Public Accountants (CPA) to maintain their professional competence and provide quality professional services. This ED is proposing updates to the AICPA’s existing Statement on Standards for Continuing Professional Education (CPE) Programs which were last revised in 2002. Some of the key proposed changes are as follows:

* CPE program sponsor s courses must contain a publication or revision date. Courses must be revised as soon as feasible following changes to relative codes, laws, rulings, decisions, interpretations, etc. Courses that undergo frequent changes must be reviewed by an individual with subject matter expertise at least once a year to verify the currency of the content.

* CPE program sponsor s group and self-study programs must include, in the development process, the participation of one CPA for accounting and auditing programs and the participation of a CPA, tax attorney, or IRS enrolled agent for tax related programs.

* The ED proposes, and more clearly defines, standards relating to Internet-based CPE programs. Group Internet-based programs must have a live instructor while the program is being presented. Program participants must be able to interact with the live instructor while the course is in progress and have the opportunity to ask, and receive answers to, questions during the presentation. Group Internet-based programs are required to employ a monitoring mechanism that verifies that participants are participating during the duration of the course. The monitoring mechanism must be of sufficient frequency and lack predictability to provide assurance that participants have been engaged throughout the program. If polling questions are used as a monitoring mechanism, at least three polling questions must be used per CPE credit hour. Once a group Internet-based program is recorded or archived for future presentation, it will continue to be considered a group Internet-based program only where a live subject matter expert facilitates the recorded presentation. Any future presentations that do not include a live subject matter expert will be considered a self-study program and will be required to meet all self-study delivery method requirements.

* For self-study programs, the proposed ED more clearly defines the use of review questions and other forms of feedback to ensure participants are adequately guided through the learning process. The proposed ED also more clearly defines the types of questions that can be used in final examinations to test the participant s knowledge of the subject matter presented and indicates that as of January 1, 2014, true or false questions will no longer be allowed on final examinations.

* Self-study CPE courses will be required to include an expiration date. For individual courses, the expiration date is one year from the date of purchase/enrollment. For a series of courses to achieve an integrated learning plan, the expiration date may be longer.

* Proposed changes relating to CPE program presentation will require program sponsors to inform participants in advance of the refund policy for courses sold for a fee (cancellation policy); the complaint resolution policy; and must include an official NASBA sponsor statement (explaining final authority of acceptance of CPE credits).

* For self study courses/programs, the proposed changes expand on the pilot test method for determining the number of CPE hours that will be assigned to a course and requires courses whose target audience includes CPAs to ensure that the sample pilot group is comprised of licensed CPAs. The proposed changes also implement a new method for determining CPE hours which takes into consideration the word count of the text associated with the course/program.

Unless otherwise established by state licensing bodies and/or other professional organizations, the proposed Standards documented in the ED will be effective January 1, 2012 for group programs, independent study, and for self-study programs being published for the first time. For self-study programs existing as of December 31, 2011, the effective date will be January 1, 2014. The deadline to submit comments on the ED is October 13, 2011.

To view this ED in its entirety, please click here.

For more information, please contact the experts listed below at PYA, (800) 270-9629.

WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON,BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

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