Virginia Regulatory Town Hall View Comments

Board of Accountancy

Board of Accountancy Regulations [18 VAC 5 ‑ 22]

Action	Promulgate Chapter 22 and Repeal Chapter 21
Stage	Fast-Track
Comment Period	Ended on 9/1/2010

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9/1/10 10:16 pm

Commenter: Lee Stephens, Spotts Fain PC

Objection to fast-tracking BOA regulations.

Fellow professionals,

It concerns me that wholesale replacement of regulations on a fast-track could throw out the baby with the bathwater. I am not a CPA, but as an attorney in Virginia I am subject to professional regulations designed to give the public confidence in the integrity of lawyers. I know, please hold the jokes. We have a long way to go to gain that confidence, and we must strive daily to raise the bar. I would ask that these Board of Accountancy proposed regulations be put on the ordinary track under the Administrative Processes Act ("APA").

Two substantive issues appear to me, two that are analogs to what we lawyers must concern ourselves with as we try to retain the public's trust. The first issue is a simple math question: there are 60 minutes in an hour, yet the old CPA regulations defined both a "Contact Hour" and a "CPE credit" as 50 minutes. The second issue is the automatic protection of CPAs from the public.

My profession defines an hour as 60 minutes for our Continuing Legal Education ("CLE"), but attendees enjoy a liberal allowance for rounding up. (If I must leave a seminar with 30 minutes to go, I'm allowed to round up to the nearest hour.) Pharmacists also define an hour as 60 minutes. Dentists, funeral directors, optometrists and veterinarians regulations are silent on the definition of an hour of continuing education. Only three other professions -- architects, auctioneers and real estate appraisers -- specifically define an hour of continuing education as 50 minutes within their regulations.

As I understand it, CPAs are required to accomplish 120 CPE hours with a 3-year look-back. 10 minutes * 120 CPE credits = 1,200 minutes of additional study that a CPA must certify they attended. That strikes me as a material difference, and a difference that should not be exempt from the APA process. CPAs are welcome to increase their CPE credits or Contact Hours to 60 minutes, but I would think your fellow accountants would want to talk about that before it becomes a permanent regulation.

Why do we professionals have to take all these continuing education courses anyway? Because laws and regulations and standards change constantly. The public wants to be able to trust that, when they hire a licensed lawyer or an accountant, they are getting someone capable of handling their matter. My second area of concern also has to do with that very public trust and BOA's proposed approach to confidential consent agreements. If there are CPAs who are bad actors, it seems to me that the way these fast-tracked regulations are cast would shield the public from being able to find out until too late.

The proposed language reads as follows:

18VAC5-22-160. Confidential consent agreements.

To determine whether to enter into a confidential consent agreement under subsection A of § 54.1-4413.5 of the Code of Virginia, the board shall consider a violation minor if the board believes that the violation was not intentional misconduct, was not the result of gross negligence, and did not have a significant financial impact on persons or entities. The board shall enter into no more than two additional confidential consent agreements with a person or firm within 10 years after the first confidential consent agreement.

I have emphasized the word "shall", because a consent agreement would be made confidential and hidden from the public automatically if: (1) unintentional, (2) not gross negligence, and (3) no significant financial impact. By using the word "shall" no discretion is left, BOA must mark the consent agreement confidential unless those 3 preconditions are met. You as CPAs can speak to item (3) (significant financial impact) better than I can. Item (1) is a question of fact by the Board. Item (2), however, I may be able to shed some light on.

Gross negligence is a high bar in Virginia law. Michie's Jurisprudence Words and Phrases goes on for more than 2 pages with varying definitions of "gross negligence". Maybe BOA has defined it somewhere so the public would know what it means to the Board of Accountancy as they ponder a violation of a CPA, but I could find it in neither the old regulations nor the proposed ones. Virginia Model Jury Instructions say this:

Instruction No. 4.030
Definition of Gross Negligence

''Gross negligence'' is that degree of negligence which shows such indifference to others as constitutes an utter disregard of caution amounting to a complete neglect of the safety of another person [another person's property]. It is such negligence as would shock fairminded people, although it is something less than willful recklessness.

Wow, do you really want just one level below that to be hidden from the public? A violation is minor and hidden until it raises to the level where it is shocking? Incidentally, it is not clear to me whether a "minor violation" is what makes it eligible for confidential treatment. As I read the proposed regulation, a CPA would have 3 strikes before they are out-ed to the public. Will that instill confidence in the profession among the public? Shouldn't that be discussed rather than fast-tracked?

My profession's reputation is called into question more often than we would like. To help protect the public the Virginia State Bar imposes safeguards like public reports on misbehavior of lawyers and CE requirements. The safety of the public is what our safeguards protect, and so should it be with public accountancy.

The baby is the trust of the public. Please do not throw the baby out with the bathwater of old regulations. Take your time and do it right. I would ask that you derail these proposed regulations from the fast-track.

Thank you,

R. Lee Stephens, Jr.

VSB #27822

CommentID: 14404