Re: Public Comment for Proposed Regulations for 18VAC5-22 Board of Accountancy Regulations
Please accept the following as my comments regarding the proposed regulatory language as published in the Virginia Register of Regulations Volume 26, Issue 24 on August 2, 2010 for the Board of Accountancy. In providing these comments, I do not represent any opinions but my own. I have concerns regarding the language in two specific sections of the proposed regulations, 18VAC5-22-90.G Continuing Professional Education and 18VAC5-22-160 Confidential Consent Agreements.
18VAC5-22-90.G
This section of the proposed regulations delineates how to determine whether a regulant has obtained the required number of hours of continuing professional education (CPE). Under the effective current regulations, an hour of CPE credit is defined as “50 minutes of participation in a group, independent study or self-study program.” Under this definition the 120 hours of CPE requirement is actually satisfied with 6000 minutes or 100 real time hours of CPE experience. The proposed regulations eliminate this definition and simply use the term “hours of continuing professional education” throughout 18VAC5-22-90. Without specific statutory or regulatory definition to change the meaning of “hour” regulants must obtain a full hour (60 minutes) of CPE to meet the legal requirement of the proposed regulations. For the 120 hour requirements this represents an increase of 20 hours or 1200 minutes of additional instruction for every three year cycle. The increase in required CPE represents a 20% increase in the cost of compliance to each regulant due to the omission of the 50 minutes definition from the proposed regulations.
A further issue arises with the requirement to obtain 2 hours of ethics CPE each year during the three year cycle. At the time these proposed regulations become effective on September 16, 2010 every regulant will be out of compliance if he/she has obtained only 100 minutes of ethics CPE per year over the past three year cycle. I would imagine the representative population would be close to 100% of Virginia licensed CPAs, including members of the Board of Accountancy. A regulant cannot go back and obtain additional CPE for prior years as those ethics courses are no longer offered and the requirement must be met on an annual basis, not on a combined three year cycle. In essence, this entire population of regulants is non-compliant and cannot renew their individual licenses as they cannot attest to satisfying the CPE requirements. For regulants who met only the minimum required hours of CPE overall in a particular year (either 15 or 20 as defined under 18VAC5-22-90.A & B) he/she will also be non-compliant with the then effective regulations under the 60 minute per hour of CPE definition.
18VAC5-22-90.G.2 further reduces the ability of instructors to meet CPE requirements. Under the proposed regulation an instructor may only count 30 hours of “preparing for and making presentations” time (emphasis added) indicating that any additional hours must be obtained through a non-instructional role. Under current regulations, instructors may obtain what can be termed as bonus CPE credits equal to 2 CPE per CPE credit of instruction. These extra instructional credits are limited to 30 per three year cycle. However, the actual time spent teaching the course is not limited under the current regulations as the paragraph defining the bonus credits appears to only address the bonus credits. For regulants who regularly earn CPE through instructing courses the proposed changes would represent a very material change in the cost, in the form of time and money, spent to obtain CPE by requiring that 90 hours in a 120 hour three year cycle come from non-instructional CPE. This regulatory change, since it is retroactive in nature, may well cause many CPE instructors to be non-compliant as of September 16, 2010 with CPE requirements.
While I hope that these CPE related issues are unintentional oversights on the part of the Board of Accountancy, both issues have a very significant and material impact on CPE requirements for regulants in the form of time and money. Since CPE providers generally follow the NASBA criteria of awarding CPE based on 50 minute intervals, these changes would mandate that Virginia Certified Public Accountants convert CPE credits from providers to meet the Virginia standards and that Virginia CPAs are able to tell the difference between the offerings of Virginia defined CPE credits and the 50 minute CPE credits. I would ask that if the Board’s intent is to increase the hours required for CPE of regulants that the Board adopt a grandfathering policy for all CPE obtained prior to September 16, 2010 in order to mitigate some of the burden imposed by these regulations and to allow compliance in conformity with the current regulations to the date of enactment of the proposed regulations.
18VAC5-22-160
§54.1-4413.5(C) mandates that the Board of Accountancy adopt regulations that “identify the type of minor violations for which confidential consent orders may be offered”. The statute further states that these orders may not be entered into where probable cause exists “to believe a licensee has demonstrated gross negligence or intentional misconduct in the practice of public accounting.” The proposed regulations only add one additional criteria for a regulant to be eligible for a confidential consent order – that the violation “did not have a significant financial impact on persons or entities.” In creating this definition, the regulations mandate that all other violations will be deemed to be minor and eligible for confidential consent orders. As a defense to complaints, regulants will simply need to state their action was unintentional, did not meet the legal standard of gross negligence (an incredibly high legal standard to prove) and that either there was no monetary damage or the damage was insignificant. The term significant is not defined within the statutes or regulations and is therefore open to interpretation by the Board and regulants.
Under this criteria, as absurd as it may sound, a regulant who losses his/her temper, uses profane language with clients that causes emotional distress to the client is eligible for a confidential consent order and may continue to practice as long as no significant financial impact to others is caused by the regulant simply because he/she claims to not know what they were doing and caused no significant financial harm. This same regulant could return to the Board two further times in a ten year period and be granted additional confidential consent orders and continue to practice as a licensed CPA. In actuality, by the regulation’s definition, the Board has no choice but to allow the confidential consent orders. Under this hypothetical situation, since the public has no access to the impairment information regarding the regulant, has the public been protected and has the Board fulfilled its duty to the public?
By stating that significant financial impact is the regulatory criteria for either allowing a confidential consent order or not, the Board adopts as policy that all other harms done to persons or entities are insignificant. This policy ignores physical harm, emotional harm and damage to reputation, all of which are recognized by our legal system and within Virginia statutes. I believe the Board of Accountancy has a duty to protect the public with relation to these other harms, not just monetary harm in fulfilling its duty. To that end, confidential consent orders should only be used where no significant impact on persons or entities was caused by the regulant. The term “significant” should be more clearly defined.
I would like to thank the Board of Accountancy for considering the comments provided in this letter. Please feel free to contact me if you require further clarification or discussion on any of the issues raised herewith.
