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Ethics for Governmental CPAs
in Florida
2015 1
J. Edward Grossman, CPA, CFE, CMA, CGMAPrincipal | CliftonLarsonAllen LLPLakeland, Florida
PROFILEEd is a principal with CliftonLarsonAllen having over 30 years of experience in public accounting. Based in Lakeland, Florida, Ed is a member of the firm’s National Assurance Technical Group. His primary responsibilities include being a technical resource for the audit and assurance practice and performing quality reviews of assurance and accounting engagements.
Technical ExpertisePractice experience has included providing accounting and assurance services to clients in a variety of industries including agriculture, financial services, manufacturing, benefit plans, and not-for-profit entities.
In addition to being a Certified Public Accountant (CPA), Ed achieved the Certified Fraud Examiner (CFE) designation in 1994, the Certified Management Accountant (CMA) designation in 1988, and the Chartered Global Management Accountant (CGMA) designation in 2012.
Education/professional involvement Bachelor’s of science (summa cum laude) in accounting from Florida Southern College American Institute of Certified Public Accountants
o Past member, PCPS Technical Issues Committeeo Past member, Auditing Standards Board Technology Issues Task Force
Florida Institute of Certified Public Accountantso Continuing Education Committeeo Mega CPE Conference Planning Committeeo Past member and chairman, Peer Review Acceptance Committee
CONTACT INFORMATION863-680-5606
CLAconnect.com
Today’s Discussion Leader is…
For More Information
FICPA Member Service Center(800) 342-3197 or (850) 224-2727www.ficpa.org/ethics
Ethics Sponsor ID (FBOA): 3461DBPR live presentation ID: 4980
3
Schedule
100 Minutes Break 100 Minutes
4
Housekeeping Details
Course evaluations via email Confirmation of attendance – sign in and
email DBPR and BOA course ID numbers Type of credit – Ethics (ETH) Participant request - enter/leave quietly Participant request – silence cell phones Other matters
5
Chapter 1
Introduction
6p. 1-1
Learning Objectives
Describe how ethical principles guide ethical decision making.
Define the term “ethics”. Describe the origins of ethical behavior. Describe how the AICPA’s Code of Professional
Conduct applies to CPAs licensed in Florida. Describe how the AICPA’s Ethics Decision Trees
can be used for guidance in workplace situations. Describe an auditor’s ethical responsibilities
under the Government Auditing Standards (Yellow Book)
p. 1-1 7
Why are we here?
861H1-22.001 p. 1-1
Why are we here? (cont.)
473.312 Continuing Education(c) Not less than 5 percent of the total hours required by the board shall be in ethics applicable to the practice of public accounting. This requirement shall be administered by providers approved by the board and shall include a review of the provisions of chapter 455 and this chapter and the related administrative rules.
9p. 1-1
Why are we here? (cont.)
80 hours over a two-year reporting period 20 hours of Accounting and Auditing 20 hours of Behavioral – maximum 4 hours of Ethics No limitation or requirement for Technical
Business
10p. 1-1
Why are we here? (cont.)
Florida became the 37th state to establish an ethics requirement
Outlined by Florida Board of Accountancy (see 61H1-33.003)
FICPA’s support is in line with national support
11p. 1-2
Yellow Book CPE Requirements
80 hours over a two-year reporting period, essentially, 80 hours of CPE
CPE to “directly enhance the auditor’s professional proficiency”
24 hours directly related to governmental topics
20 out of the 80 hours to be completed in any one year
12p. 1-2
Which Ethics Policies to Follow?
13p. 1-4
Policies may contradict. Are you responsible to follow more than one?
Major Course Topics
Relationship of Florida laws and rules to national standards
Ethical situations in organizations Florida Statutes, Chapter 455, 473, and FAC
61H1 Issues of competency in public accounting Auditor’s ethical responsibilities – Yellow
Book
14p. 1-4
Major Course Topics (cont.)
The relationships of ethics and independence rules and implications to public accounting
Government auditing standards – independence requirements
Ethical responsibilities to clients other practical considerations
Future implications for CPAs
15p. 1-4
What are Ethics?
16
The discipline dealing with what is good and bad with moral duty and obligation.
p. 1-5
Ethics – Key Definitions
Ethics are: A set of moral principles or values A theory or system of moral values The principles of conduct governing an
individual or a group A guiding philosophy
17p. 1-6
Ethical Behavior Defined
“The term, ethical behavior, refers to how an organization ensures that all its decisions, actions, and stakeholder interactions conform to the organization’s moral and professional principles. These principles should support all applicable laws and regulations and are the foundation for the organization’s culture and values. They define ‘right’ from ‘wrong’ behavior.”
--National Malcolm Baldridge Quality Award
18p. 1-6
Ethics and Philosophy
Ethics has traditionally been considered a part of philosophy
Philosophy is a study of the principles of any activity
It is a systematic examination of basic concepts such as:o Trutho Existenceo Realityo Causalityo Freedom
19p. 1-6
Ethics and Psychology
Behavioral sciences include: Psychology Sociology Cultural Anthropology
20p. 1-7
Ethics and Religion
Religion has a concern with moral conduct influencing normal behavior
Religions may have different sets of ethical values depending on the religion
Ethics is often a common ground for different religions
21p. 1-7
Teaching of Ethics
Can one teach someone to be ethical?
No, it is either in one’s self or it is not.
Can one teach someone what is ethical behavior?
Yes, it is a system of values or principles for actions.
22p. 1-7
Responding to a Crisis
The ethics requirements in the CPA profession in Florida (and maybe everywhere) most likely come as a response to a crisis.
The responses have been at many levels:o Regulatoryo Educationalo Personal
23p. 1-8
Ethics and the CPA Profession
The ethics of our profession begin with the individual
Organizational ethics are guided by individual ethics
CPA reputation has been based on core values for over 100 yearso Honestyo Integrityo Trustworthiness
24p. 1-8
Changes – A Crossroads for the Profession
Increased emphasis on ethics at state and national levels
Changes in our professiono Ownershipo Solicitationo Commissionso Sale of financial productso Competitive bidding
25p. 1-9
Ethics Regulation
Securities and Exchange Commission PCAOB AICPA FICPA IRS State Regulatory bodies Others
26p. 1-9
Discussion Points
Public perception of accountants Ethical decision making Current examples of ethical behavior
27p. 1-10
AICPA Code of Professional Conduct
.02 These principles express the profession‘s recognition of its responsibilities to the public, to clients, and to colleagues. They guide members in the performance of their professional responsibilities and express the basic tenets of ethical and professional conduct. The principles call for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.
28p. 1-10
General Questions
1. Whom does the Code of Professional Conduct govern?
2. Can the AICPA revoke my license due to a disciplinary matter?
3. Does the AICPA contact other state CPA societies and regulatory agencies having disciplinary responsibilities?
29p. 1-11
General Questions (cont.)
4. Do other state CPA societies and federal and/or state regulatory agencies refer matters to the AICPA?
5. Am I subject to the same rules of the Code if I practice public accounting or work in business and industry?
6. Can I discuss the content of the CPA exam I recently sat for?
30p. 1-12
General Questions (cont.)
7. Am I required to file a timely tax return?
8. How could I have a conflict of interest when I am no longer working in public accounting?
9. What established accounting principles must I follow and what is enforceable under the Code of Professional Conduct?
31p. 1-12
Revised AICPA Code of Conduct
Two articles from the Journal of Accountancy:o Ethics made easier: How to use the revised
AICPA Code of Professional Conduct (June 2014)
o Revised AICPA Code of Ethics … What’s the Fuss: A Guide to Viewing the Updated Format (February 2014)
32p. 1-13
Ethics Decision Trees
For Government
33p. 1-12
Chapter 2
Ethical Beliefs and Behaviors
in US Businesses and Government Agencies
34
Learning Objectives …
p. 2-1
Learning Objectives
Review the 2013 National Business Ethics Survey
Examine the main points and recommended action steps from 2014 Report to the Nations
35p. 2-1
National Business Ethics Survey
The Ethics Resource Center (ERC) was founded in 1922, and is America’s oldest non profit organization devoted to the advancement of high ethical standards and practices in public and private institutions
2011 National Business Ethics Survey, 8th in the series
ERC polled over 6,500 employees in the business, government and non profit sectors
Longitudinal research study; identifies context for national trends
36p. 2-1
Survey Results
The Good News … The percentage of workers who said they
observed misconduct on the job fell to an all-time low of 41%, down from 45% two years ago and a record high of 55% six years ago.
Observed misconduct fell in every one of the 26 specific categories in both NBES 2011 and NBES 2013.
Pressure to compromise standards, often a leading indicator of future misconduct, also was down – falling from 13% in 2011 to 9%.
37p. 2-2
Survey Results (cont.)
Areas of Concern … While misconduct is down overall, a relatively
high percentage of misconduct is committed by managers – those who are supposed to set a good example of ethical conduct and make sure that employees honor company rules.
Workers reported that 60% of misconduct involved someone with managerial authority from the supervisory level up to top management.
24% of observed misdeeds involved senior managers.
38p. 2-3
Survey Results (cont)
39p. 2-3
Effects Training & Compliance
40p. 2-5
Ethical Culture
41p. 2-6
In Strong Ethical Cultures... Management and supervisors
o Communicate ethics as a priorityo Set a good example of ethical conducto Keep commitmentso Provide information about what is going ono Support following organizational standards
Culture is another way of referring to “the way things are done around here.”
Report to the Nations
Survey conducted by the Association of Certified Fraud Examiners
Global study based on data from 1,483 fraud cases
2014 Report to the Nations, 8th in the series Longitudinal research study; identifies context
for global trends
42p. 2-10
Survey Results
Impact of Occupational Fraud – organizations lose 5% of revenue annually
Fraud Detection – takes 18 months to be detected Most common type of occupational fraud - asset
misappropriations - occurring in 85% of the cases; financial statement fraud at 9% had the greatest financial impact
Most fraud cases reported by tips Victims of Fraud – larger impact to smaller businesses,
fewer anti-fraud controls, less able to recover losses Perpetrators of Fraud – higher levels of authority
caused greater losses, most are first-time offenders
43p. 2-10
Discussion Points
Retaliation and ethical conduct Whistleblowing
44p. 2-12
Organizational Ethics -Links for Government
City Ethics - www.cityethics.org FirstGov.gov - www.firstgov.gov/ Dodd-Frank Wall Street Reform & Consumer
Protection Act - http://sec.gov/spotlight/dodd-frank.shtml
House Committee on Standards of Official Conduct - www.house.gov/ethics
US Office of Government Ethics - www.usoge.gov
45p. 2-13
Chapter 3
Assurance Provided by Regulation
(Chapter 455)
46
Learning Objectives …
p. 3-1
Learning Objectives
Describe the role of the Florida Board of Accountancy per Chapter 455, FS
Describe the complaint process used by the Florida Board of Accountancy
List reasons that would cause the Florida Board of Accountancy to impose disciplinary actions on a CPA per Chapter 455.227, FS
47p. 3-1
Florida Board of Accountancy
Powers and duties include:o Authority to issue citationso Conduct disciplinary proceedingso Designate violationso Recover costs
48p. 3-1
(455.01(1), FS)
The Division of CertifiedPublic Accountants
The Division of Certified Public Accounting is a division within Florida’s Department of Business and Professional Regulation (DBPR)
49p. 3-2
Tallahassee, FloridaDepartment of Business and
Professional Regulation Headquarters Gainesville, Florida
Section 20.165(2)(c)(2), Florida Statutes, states that the Division of Certified Public Accounting shall be
located in Gainesville.
Number of Licenses
The division is responsible for the licensing and regulation of over 32,000 Certified Public Accountants (CPAs) and nearly 5,500 CPA firms
50p. 3-2
30,488 Active CPAs 2,314 Inactive CPAs 5,416 Accounting Firms
Source: DBPR Division of Certified Public Accounting, April 2015
Complaints Received by BOA
51p. 3-2
Source: DBPR Annual Reports
09-10
10-11
11-12
12-13
13-14
Total received 301 328 230 273 640
Legally sufficient 235 161 123 216 580
Probable cause found
55 183 35 64 36
No probable cause 172 150 13 127 286
Administrative 24 22 8 6 35
Disciplinary action 48 27 16 9 24
Disciplinary Activity by AICPA
52p. 3-3
2011 2012 2013
2014
Cases opened during period
389 768 437 708
Admonished 13 161 76 66
Corrective action required
91 244 167 113
No violation/ dismissed 50 36 69 81
No further action 53 182 85 100
Subsequent monitoring completed satisfactorily
29 32 30 32
Expelled or suspended n/a 88 90 113
Key Explanations
What is ‘legally sufficient’?o A complaint is legally sufficient is it contains
ultimate facts that show a violation of chapter 455, FS, Chapter 473, F.S. or Chapter 61H1, FAC
What is ‘probable cause’? o If members of the Probable Cause Panel
determine that there is Sufficient Evidence to support the filing of charges against a licensee
53p. 3-3
Complaint Process
54p. 3-5
Cases found to have probable cause are presented to the full board for final action.
OGC Prosecuting Attorney presents case to the Probable Cause Panel to determine if probable cause exists, and/or to determine if the complaint should be forwarded to a consultant for further investigation
Complaints found to have legal sufficiency are forwarded to the Office of General Counsel (OGC)
The Division is responsible for reviewing complaints forlegal sufficiency
Final Order
Disciplinary Actions by the Board
Deny an application for licensure Revoke or suspend a license Impose fine not to exceed $5,000 for each
count Issue a reprimand Place licensee on probation for a period of time
and possible CPE or work under the supervision of another licensee
Restrict scope of practice
55p. 3-6
Grounds for Disciplinary Action
Violation of any provisions of FS 455.227(1) or any other provision of FS 473
Attempting to procure a license to practice public accounting by bribery or fraudulent misrepresentations
Having a CPA license revoked, suspended, denied, or otherwise acted against by the licensing authority of another state, territory, or country
56p. 3-11
Grounds for Disciplinary Action (cont.)
Being convicted or found guilty, or entering a plea of nolo contendere to a crime in any jurisdiction directly relating to practice of public accounting or ability to practice
Making or filing a false report or record that licensee knows to be false
57p. 3-11
Grounds for Disciplinary Action (cont.)
Other grounds include:o False or fraudulent advertisingo Committing acts of fraud, negligence,
incompetence, or misconducto Violation of 455 or 473 or FACo Practicing on a revoked, suspended,
inactive or delinquent licenseo Suspension of right to practiceo Any fraudulent act while licensed
58p. 3-11
Stopping Unlicensed Activity
To report unlicensed activity: Call the DBPR unlicensed activity hotline at
(866) 532-1440 Email [email protected] Complete the online form Use the mobile app
59p. 3-12
Chapter 4
Assurance Provided by Regulation
(Chapter 473)
60
Learning Objectives …
p. 4-1
Learning Objectives
Define the key terms that characterize public accounting in Florida (473.302, FS)
Describe the basic powers and duties of the Florida Board of Accountancy
Describe the requirements to become a CPA licensed in Florida 473.308, FS)
61p. 4-1
Learning Objectives (cont.)
Describe the requirements for a practice to become licensed in Florida (473.309, FS)
Name changes to a licensed firm that must be reported to the Florida Board of Accountancy (61H1-26.004)
List the CPE requirements necessary to maintain a CPA license in Florida (473.312, FS)
Describe the process of practice mobility in Florida
62p. 4-1
Statutory References
63
The public is assured by the State Legislature in the Florida Statutes, Chapter 473 that the Legislature,
“…deems it necessary in the interest of public welfare to regulate the practice of public accountancy in this state.”
p. 4-1
Practice of Public Accounting
Certified Public Accountant – person holding a license to practice – 473.302(4)
Firm – Any entity engaged in practice of public accounting – 473.302(5)
Practice of or practicing public accountancy or public accounting – 473.302(8)(a)(b)(c)
p. 4-2 64
Powers and Duties of the Board
FS 473 gives the BOA certain powers and duties:
o Feeso Examinationso Licensureo Practice requirementso Continuing educationo Other matters
65p. 4-2
473.306, Examination
Requirements for taking CPA Exam: Good moral character Meets academic requirements
o 120 hours with a concentration in accounting and business
o Must have an additional 30 semester hours(150 total) to be issued a license
66p. 4-3
473.308, Licensure
Requirements for getting a Florida license: Baccalaureate degree with a major in accounting
or its equivalent plus at least 30 semester/45 quarter hours
Must have one year of work experience Good moral character Section 473.308(7) waiver Five year experience as CPA
o Under CPA in any state or equivalent as determinedby the BOA
o May waive the additional education requirements
67p. 4-3
Practice Requirements – Partnerships, Corporations, LLCs
May not engage in practice as defined in 473.302(8)(a) unless:
o Form recognized in Florida
o Partners/ shareholders /members owning 51% must be CPA in some state
o Partner/ shareholder/ member domiciled in Florida must be Florida CPA with active license
o One partner/ shareholder/ member must be Florida CPA with active license
68p. 4-6
(473.309, FS)
Licensure of Legal andOther Entities
Sole proprietor, partnership, corporation, limited liability company, or any other legal entity seeking to engage in the practice of public accounting, as defined in s.473.302(8)(a)
o Must file application for licensure with DBPR and supply the required information
o Application must be made upon the affidavit of a sole proprietor, general partner, shareholder, or CPA member
69p. 4-7
(473.3101(1), FS)
Renewal of License
The department shall renew a license upon receipt of: Renewal application
Fee
Certification of CPE by BOA
Exception for spouses of members of Armed Forces (61H1-33.0065)
70p. 4-9
(473.311, FS)
Informing DBPR of Address Changes
All Florida CPAs must have their correct street address on file with the BOA as their ‘address of record’
All Florida CPAs must notify the BOA within 30 days of any changes to the ‘address of record’ and any change from their original licensure application
Notification online at the Division’s site is considered “in writing”
71p. 4-9
(61H1-26.005, FAC)
Informing DBPR of Changes
Firm must file written notification with Department within 30 days of:o Addition of any CPAo Any non-CPA co-partner, shareholder or
member in any Florida officeo Any CPA, non-CPA co-partners, shareholders
or members have convictions or findings of guilt, regardless of adjudication
72p. 4-9
(61H1-26.004, FAC)
Informing DBPR of Changes (cont.)
o Having the right to practice by the SEC, IRS, others acted against, including denial of licensure
o Any other matters showing a lack of good moral character
o The retirement or death of a co-partner, shareholder or member in any Florida office
o A change in the name or termination of the entityo When the firm or any existing co-partner,
shareholder or member has been the recipient of a conviction or finding of guilt of a crime in any civil lawsuit
73p. 4-10
(61H1-26.004, FAC)
Communicating with DBPR
Changing your address online will satisfy the “in writing” requirement
Do check your license periodicallyo www.myfloridalicense.como Choose Renew a License and follow the promptso To log in initially, use your license number and
last four digits of your SSN REMEMBER – you are personally responsible
for keeping your license information up to date!
74p. 4-10
CPE - Government Auditing
Any CPA involved in governmental audits including planning, directing, field work, or reporting should comply with the “Yellow Book” CPE requirements
Required to take 24 hours of CPE that directly relates to government auditing, the government environment, or the specific environment of the audited entity
See details at http://www.gao.gov/yellowbook
Retain documentation in case of CPE audit75p. 4-11
Changes to CPE Reporting
DBPR no longer requires CPAs to report their CPE to DBPR
All licensees, regardless of whether you have an established account with DBPR’s Online Services are required to register as a new user
DBPR will rely on the honor system, self-reporting of hours earned
Retain documentation in case of CPE audit
76p. 4-12
Peer Review
Effective January 1, 2015, a sole proprietor, partnership, corporation, limited liability company, or other firm licensed under s. 473.3101 and engaged in the practice of public accounting as defined in s. 473.302(8)(a), except for the performance of compilations and reviews as those terms are defined by the board, must be enrolled in a peer review program.
77p. 4-12
(473.3125 FS)
The Requirement
Firms who already participate in a voluntary peer review program for purposes of meeting AICPA membership requirements, Government Auditing Standards and/or other regulatory requirements will be unaffected by the new law. Those firm’s peer review year-ends and due dates will not change.
Firms who do not already participate in a voluntary peer review program and meet the requirements set forth in the Law will need to enroll in an approved program beginning January 1, 2015.
The Board will require confirmation of a firm’s enrollment as part of the firm’s biennial license renewal.
A firm that is terminated from the program by a Board approved administering entity shall notify the Board in writing within 30 days of the effective date of the termination and provide a copy of the termination letter.
78p. 4-12
Inactive Status
A Florida certified public accountant may request that her or his license be placed in an inactive status by making application to the department
The board may prescribe by rule fees for placing a license on inactive status, renewal of inactive status, and reactivation of an inactive license
79p. 4-12
(473.313 FS)
Reactivation
(61H1-33.006)
Complete forms
o DBPR 0010-2, Master Individual Applicationo DBPR CPA 5011-1, Request for Change of Status
Required CPE hours
o one reporting period (120 hours)o two reporting periods (200 hours)o three-plus reporting periods (280 hours)
80p. 4-13
Mobility
(473.3141 FS)
Mobility (or also know as “practice mobility”) is the ability of a licensed CPA to gain a practice privilege outside of their home state without getting an additional license in another state where they will be serving a client.
State Boards of Accountancy will gain automatic jurisdiction over all CPAs practicing in their states whether they are licensed or registered in their state.
Visit www.CPAMobility.org for practice requirements of other states.
81p. 4-14
Mobility (cont.)
82
Mobility (cont.)
(473.3141 FS)
83p. 4-14
2007 - only 4 states had passed mobility provisions
By 2014, 49 states have enacted mobility
statutes, Hawaii (pending) and the District of Columbia have adopted mobility legislation.
Substantial Equivalency – 3 Issueso Educationo Experienceo Enforcement
CPAs Licensed in Other States
(473.314 FS)
Non-Florida CPAs may provide public accounting services in Florida without: o obtaining a license o notifying or registering o paying a fee
The individual must hold a valid CPA license from a state that is “substantially equivalent”
84p. 4-15
CPAs Licensed in Other States (cont.)
(473.314 FS)
An individual who qualifies to practice may offer or provide services in person, by mail, by telephone, or by electronic means, and a notice, fee, or other submission is not required
Non-Florida CPAs and their firm will consent:o To the personal and subject matter jurisdiction
and disciplinary authority of the board; o To comply with this chapter and the applicable
board rules
85p. 4-15
CPAs Licensed in Other States (cont.)
(473.314 FS)
o Practice only with a valid (non-Florida) license o To the appointment of the state board that issued
the individual's license for any action or proceeding against the individual or firm
An individual who qualifies to practice under this section may perform the services identified in s. 473.302(8)(a) only through a firm that has obtained a license issued under s. 473.3101 or is authorized by s. 473.3101 to provide such services.
86p. 4-15
Temporary License
(473.314 FS)
Not valid for more than 90 days
Fee of $400
Will not cover more than one engagement
Not required for person entering this state solely for the purpose of preparing federal tax returns or advising on federal tax matters
87p. 4-14
Chapter 5
Ethics of Integrity, Objectivity,Commissions, Contingencies
and CommunicationsFAC 61H1
88
Learning Objectives …
p. 5-1
Learning Objectives
Define the term “Objectivity” as it relates to the practice of public accounting
Define the term “Integrity” as it relates to the practice of public accounting
Describe the concept of “materiality” as defined by FASB No. 2, Qualitative Characteristics of Accounting Information
Describe the situations when commissions or referral fees are allowed per Florida rule 61H1-21.003
Describe Florida’s rule 61H1-21.006 for communicating with another client 89p. 5-1
Learning Objectives (cont.)
Describe Florida’s rule 61H1-21.006 for communicating with another client
Define Objectivity and Integrity as well as ethical responsibilities under Government Auditing Standards
Describe guidance regarding “gifts” at the federal and state levels
90p. 5-1
Comparison of Florida Rules to National Standards
FAC 61H1-21.002 Integrity and ObjectivityIn the Florida Administrative Code, a CPA shall not:
o Knowingly misrepresent factso Subordinate their judgment to:
• Clients• Employers• Other third parties
Florida standards have their basis in the AICPA’s standards - Section 1.100, Integrity and Objectivity of the AICPA Code of Professional Conduct
91p. 5-2
Definition of Integrityand Objectivity
Being candid Being honest Placing service
and public trust above personal advantage and personal gain
Doing the right thing
Acting in good faith Observing both
form and spirit of professional standards
92p. 5-2
Definition of Integrity
“Integrity can accommodate the inadvertent error and the honest difference of opinion; it cannot accommodate deceit or subordination of principle.”
Source: AICPA ET 0.300.040, Integrity, .03
Or, in other words …
“Doing the right thing when no one is looking.”
93p. 5-3
Integrity & Objectivity
In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.
94p. 5-3
(AICPA ET §1.100.001)
Section 1.10 Integrity & Objectivity
Actions deemed violations:o Make, permit, or direct materially …false or
misleading entrieso Fail to correct materially…misleading
documents or recordso Signing, permitting to sign or directing to sign
materially…false information
95p. 5-4
Conflicts of Interest
A conflict of interest may occur if a member performs a professional service for a client or employer and the member or his or her firm has a relationship with another person, entity, product, or service that could, in the member's professional judgment, be viewed by the client, employer, or other appropriate parties as impairing the member's objectivity.
96p. 5-3
(AICPA ET §1.110.010)
Conflicts of InterestAICPA Examples
Performing litigation services for a plaintiff with a lawsuit filed against a client of the member's firm
Providing tax or personal financial planning services for a married couple who are undergoing a divorce, and both parties asked the member for professional services
Suggesting that a client invest in a business in which he or she has a financial interest
Providing tax or PFP services for several members of a family who may have opposing interests
97p. 5-3
Conflicts of InterestAICPA Examples (cont.)
Serving on a government’s board of tax appeals, which considers matters involving several of the member's tax clients
Referring a PFP or tax client to an insurance broker or other service provider, which refers clients to the member under an exclusive arrangement to do so
Recommending a client to a service bureau in which the member or partner(s) in the firm hold material financial interest
98p. 5-3
Member Obligations toExternal Accountant
Rule 102-3 indicates that a member must, “…maintain objectivity and integrity in the performance of a professional service. In dealing with his or her employer's external accountant, a member must be candid and not knowingly misrepresent facts or knowingly fail to disclose material facts. This would include, for example, responding to specific inquiries for which his or her employer's external accountant requests written representation.”
99p. 5-4
Definition of Materiality
Materiality – What is it?
“Magnitude of an omission or misstatement of accounting information that, in the light of
surrounding circumstances, makes it probable that the judgment of a reasonable person
relying on the information would change or be influenced.”
100
Defined by FASB Statement of Financial Accounting Concepts No. 2,
Qualitative Characteristics of Accounting Information
p. 5-4
Materiality
Materiality has been defined in FASB, AICPA, SEC, and PCAOB documents …
So, if the definitions are everywhere,
what’s the problem?
101p. 5-4
Materiality (cont.)
The problem is, there is…
o No authoritative formulation of materiality in the law or accounting literature.
o May be quite small numericallyo Must be considered quantitatively and
qualitatively
102p. 5-4
103p. 5-5
An increased emphasis on audit quality and ethics
An extensive update of the performance audit standards to include a specified level of assurance within the context of risk and materiality
May need to set lower materiality levels than in private sector–public accountability
GAS Materiality
Impairment of Objectivity or Integrity
Rule 1.285.010 – “Offering or Accepting Gifts and Entertainment”
What about gifts???o Nature of gifto Occasiono Costo Other matters
104p. 5-5
Ethical Responsibilities under GAS
GAS has guidance on: Public interest Professional behavior Integrity Objectivity Proper use of government information,
resources, and position
105p. 5-6
Gifts at the Federal Level
Use common sense Pay your own way for meals and entertainment
valued over $20 Pay your own transportation and
accommodations Pay fair market price for products and services Keep records of your expenses If in doubt, don’t accept! See Appendix B for ethics principles
106
(5 C.F.R. § 2635.202-204)
p. 5-7
Gifts at the State Level
Follow guidance from your own agency and FS 112.3148
Don’t accept gifts from a political committee or lobbying organization
Determine fair value of gifts – actual cost less taxes & gratuities
Honorariums treated similarly to gifts See Appendix G for 112, FS
107
(Florida Statutes 112.3148)
p. 5-8
Commissions or Referral Fees
Prohibits commissions or referral fees with:o Auditso Reviewso Compilationso Prospective financial datao Services resulting in an expression of
opinion
108
(FAC Section 61H1-21.003)
p. 5-10
Commissions or Referral Fees (cont.)
CPA must have signed engagement letter with details of financial arrangements
CPA must hold appropriate licenses Engagement letter must disclose if not
independent (other than commission or contingent fee)
109
(FAC Section 61H1-21.003)
p. 5-10
Contingent Fees
Not on services for which commissions or referral fees could not be accepted
Allowed only on findings of the government - not that of the licensee
Some exceptions
110
(FAC 61H1 – 21.005)
p. 5-12
Communication with Client of Another Licensee
If a client of one CPA or firm requests a second CPA or firm to provide professional advice on accounting or auditing matters in connection with an expression of opinion, the second CPA or firm must consult with the first CPA or firm, after obtaining the client's consent, to make certain that the (second CPA or firm) is aware of all the relevant facts.
111
(FAC 61H1 – 21.006)
p. 5-14
Chapter 6
Competency and Related Issues
112
Learning Objectives …
p. 6-1
Learning Objectives
Describe the four general standards of competence(61H1-22.001)
Review standards of documentation to the performance of audits, reviews, and compilations
Describe the purpose of the Clarity Project Review amendments to the Code of Professional
Conduct ethics interpretations and rulings
113p. 6-1
Florida Standards - Compliance
The Florida standards require compliance in four general areas:1. Professional Competence2. Due Professional Care3. Planning and Supervision4. Sufficient Relevant Data
114p. 6-1
Competence
The AICPA deals with the issue of Competence in its General Standards, AICPA ET 1.300.001
The Florida Rules are found in 61H1-22.001, Competence (General Standards)
Both sets of standards are closely aligned
115
(61H1 – 22.0001)
p. 6-1
Professional Competence
Agreement to perform implies that the member has necessary competence to complete the engagement
Member does not assume a responsibility for infallibility of knowledge or judgment
Competence involves both the member and his/her staff
A CPA must be in charge of all public accounting services performed by the firm
116p. 6-2
Due Professional Care
Assumes the person offering services possess the “degree of skill commonly possessed” by other persons
Assumes the person exercises that skill with “reasonable care and diligence”
117p. 6-2
Planning and Supervision
“A licensee shall adequately plan and supervise an engagement.”
118p. 6-2
Sufficient Relevant Data
Obtain sufficient relevant data to afford a reasonable basis for a conclusion or recommendations in relation to any professional services performed
119p. 6-2
Interpretations Under Rule 201
Competence to perform professional services involves:o The technical qualifications of the member and the
member's staffo Ability to supervise and evaluate the quality of the
work performed
120p. 6-2
Interpretations Under Rule 201 (cont.)
Competence relates to:o Knowledge of the profession's standards,
techniques and the technical subject matter involved
o The capability to exercise sound judgment in applying such knowledge in the performance of professional services
121p. 6-3
Hindsight
122
How we may be judged
p. 6-4
Hindsight Judgment
We will be judged for compliance with the ethical standards (professional competence, due professional care, planning and supervision, and sufficient relevant data)
Often these standards may be judged after the situation has occurred
Those judging us may ask, “Did you…” We must protect ourselves from perfect hindsight
vision
123p. 6-4
Hindsight Protection
Documentation
Documentation
Documentation
Documentation
Documentation
124p. 6-5
Documentation Requirements
Documentation requirements are found in many professional standards: Auditing Standards Review Standards Compilation Standards Quality Control Standards Attestation Standards Other Standards
125p. 6-5
Audit Documentation
For our protection, we must understand the general body of standards to which we will be held accountable
Includes AICPA standards as well as Florida requirements
Documenting is your best means of defense. Be sure to document in writing , and in a way that is industry specific and timely.
126p. 6-5
Clarity Standards
127p. 6-6
The Clarity Project was completed June 2014o Redrafted auditing sectionso GAAS now includes objectives and requirements of the
auditor AU-C identifier added during transition is being
retained SASs 122-127 are effective for audits for periods
ending on or after December 15, 2012. SASs 128-129 are effective for audits for periods
ending on or after December 15, 2014.
Clarity Standards Bring New Auditor’s Report
New report headings Expanded communications about management’s
responsibilities Expanded communications about auditor’s
responsibilities Effective for periods ending on or after December
15, 2012
128p. 6-7
Compilation and Review
SSARS 21 issued Oct. 2014 for periods after Dec. 15, 2015
Requires additional documentation and signed engagement letters
Section 70, Preparation Service, is considered a non-attest function
Allows the reason(s) for the lack of independence in a compilation engagement
p. 6-7 129
Specific Standards
A&A Standards are generally the same as those of the AICPA
Other Standards are generally those of the AICPA
Some standards are not authoritative Florida’s assembled financial statements are
NOT recognized by the AICPA New standards for local Government audits –
Auditor General Rules
p. 6-7 130
GAS– General Standards
Independenceo free from personal, external, & organizational
impairments Professional Competence
o Professional skepticism, diligence Judgment
o Engagement staff must collectively possess adequate professional competence
p. 6-8 131
Most Frequent Violations of Professional Standards
The most common areas with deficiencies were: Single audit Auditor’s reporting Audit procedures Financial statement deficiencies See Appendix C for the report
p. 6-8 132
New Ethics Guidance from the AICPA
Framework for independence standards [ET Section 100-1.20]o Definitions of Public Interest and changes to threats
Disclose client info to third parties [ET Sections 92.05 and 391.2]o Disclosing info without permission is more limited
Members in business [ET Section 92.22]o Members must follow Code if type of services
requires it
133p. 6-9
New Ethics Guidance from the AICPA (cont.)
Disclose prior employer confidential information [ET Sections 92.05, 391.2, 501.9]o Limits member’s disclosure about prior employers
Concept of “financial interest threats” is expanded to business members [ET Section 100-1.20]o Now requires members in business to recognize
financial interest threats and safeguards Expands what is false or misleading acts to all CPAs
[Interpretation 501.10, .11]o Now applies to members in business
134p. 6-9
New Ethics Guidance from the AICPA (cont.)
Modifies GAAP for Rule 203 [Interp. 203-5]o May now use but denote the framework used
Explains when members may withhold records prepared for clients [Interp. 501-1]o Members must give client prepared records on
request; may retain if unpaid fees or pending litigation exists
Members may not use misleading firm names [Interpretations 505-4 and 505-5]o CPAs should not use misleading firm names
135p. 6-9
FAQs from the AICPA Ethics Hotline
Blind Trusts Campaign Contributions Disclosure of Commissions Independent Contractors Letter of Intent to Purchase Practice Pro Bono/Below Cost Fees Compliance with SSCS’s When Member Does Not
Hold Out As CPA
136p. 6-11
Chapter 7
Ethics and Independence
137
Learning Objectives …
p. 7-1
Learning Objectives
Compare the similarities and differences between Florida and national rules for Independence
Compare independence standards between the Florida Board of Accountancy, AICPA, SEC, and Government Accountability Office
Define the key terms per AICPA’s Professional StandardsET 92.04
138p. 7-1
Learning Objectives (cont.)
Identify the types of individuals who many impair the independence of an engagement team
Distinguish when independence is or is not impaired when providing non-attest services to attest clients per AICPA Interpretation 101-3
139p. 7-1
Which Rules are for You?
The Florida Legislature The FL BOA The AICPA The PCAOB The SEC Yellow Book and/or OMB Requirements Others
140p. 7-1
Key Terms
Covered membero Single Officeo Multi Office
Services performedo Attest serviceso Nonattest services
Client Relationships
141p. 7-3
Who is a Covered Member?
Individual on attest engagement team
Individual in a position to influence
Partner or Manager providing nonattest services if…
Partner in office of engagement partner
The firm Firm or commonly
controlled entities
142p. 7-3
Services Performed – An Attest Engagement?
An engagement that requires independence (ET 92.01)
In Florida, FS 473.315 sets the stage. Florida has “Standards for Independence” “A certified public accountant shall not express
an opinion of the financial statements of an enterprise unless she or he and her or his firm are independent with respect to such enterprise.”
143p. 7-6
473.315 IndependenceTechnical Standards
No opinions unless independent
BOA will adopt rules on independence
144p. 7-6
61H1-21.001 Independence
The Florida Statutes are very clear on independence and expressing an opinion
The technical standards for independence are in FAC 61H1-21-001
61H1-21.001(2) sets out the standards known as “Standards for Independence” for Florida CPAs
Requires compliance with this Rule
145p. 7-6
Gifts and Entertainment
Rule 101, Ethics Ruling No. 114, “Acceptance or Offering of Gifts or Entertainment to or from an Attest Client.”
Position to influence Significance Reasonable
146p. 7-7
Code of Professional Conduct
“The Code of Professional Conduct was adopted by the membership to provide guidance and rules to all members - those in public practice, in industry, in government, and in education - in the performance of their professional responsibilities."
Introduction to Code of Professional Conduct, AICPA
147p. 7-8
Code of Professional Conduct (cont.)
Florida’s “Standards for Independence” has a direct reference to the AICPA’s Code of Professional Conduct
From the pronouncements, one can assume that if you are either a member of the AICPA or a licensed Florida CPA, the provisions for independence will apply
The major question is – apply to which engagements?
148p. 7-8
Basic Engagements
Five basic engagements require independence:
1. Audit2. Review3. Compilation4. Attestation5. Prospective Financial Statements
149p. 7-8
Basic Engagements (cont.)
The AICPA’s Ethics Interpretation No. 101-3, states that an attest engagement is any engagement which requires the CPA to be independent
Interpretation does not apply to a compilation engagement which the accountant has modified the report to indicate a lack of independence
No question that a review engagement or an audit engagement is an “attest” engagement
In SSARS 19 there is a clear indication that a compilation is an attest engagement
150p. 7-8
Engagements
AR 60.05 A compilation is a service, the objective of which is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework. Although a compilation is not an assurance engagement, it is an attest engagement.
151p. 7-9
Who is the Client?
“Client” shall be deemed and construed to mean the person(s) or entity which retains a licensee for the performance of public accounting services.”
152p. 7-9
(FAC 61H1-20.003)
Independence of Internal Auditors
Internal auditors reporting internally to management are free from impairment of independence if they are: Accountable to the governmental head Report results of work to the governmental
head Located organizationally outside of staff or
line management functions Has access to those charged with
governance
153p. 7-10
Independence Changes in Compilation & Review
Engagements
In a compilation when the accountant is not independent, the accountant should indicate the lack of independence
SSARS 19 states that the accountant is not precluded from disclosing a description about the reason(s) independence is impaired
Disclosing the reason(s) is not required but is optional
154p. 7-10
SSARS 20
“Revised Applicability of Statements on Standards for Accounting and Review Services”
SSARS do not apply when SAS 100, SAS 116, and SAS 121 apply.
155p. 7-11
Chapter 8
Independence: Non-attest, Non-audit Services
156
Learning Objectives …
p. 8-1
Learning Objectives
Describe the implications of the AICPA’s Interpretation101-3 for nonattest services for attest clients
Describe the independence provisions of Government Auditing Standards (Yellow Book) relating to nonaudit services for audit clients
157p. 8-1
AICPA and GAO Standards
Both AICPA and GAS provide guidance for nonattest services by an auditor
Nonattest audits must comply with both sets of standards
GAO rules are typically more restrictive The standards are different, see comparison in
Appendix E
158p. 8-1
Performing Nonattest Services Independence Rules of AICPA
159p. 8-2
Under Interpretation 101-3 the independence rules may come from several authoritative bodies.o FL BOAo AICPAo SECo GAOo Department of Labor
Nonattest Services for a Client
160p. 8-2
When nonattest services are performed for clients for which attest services are performed: o Documentation of understanding with
client is necessaryo The requirements of 101-3 are still being
revised
Nonattest Services for a Client (cont.)
161p. 8-2
Clients must agree to do certain things:o Make all management decisionso Designate an employeeo Evaluate adequacy and resultso Accept responsibilitieso Establish and maintain controls
Nonattest Services for a Client (cont.)
162p. 8-3
Member must establish and document in writing his/her understanding with the client:o Engagement objectiveso Serviceso Client’s acceptanceo Member’s responsibilitieso Any limitations
AICPA Interpretation 101-3
Revisions issued by the Professional Ethics Executive Committee (PEEC)
Revisions are in bookkeeping, internal audit services, valuation, appraisal, actuarial services, and information systems design and implementation
Revisions tighten the requirements for documentation of the member’s understanding with the client regarding the services to be performed
163p. 8-3
Professional Ethics Quiz
164
…do you know the answer?
p. 8-4
Performing Nonattest Services Independence Rules of GAS
Overarching Principles1. The auditor should not provide
nonaudit services that involve performing management functions or making management decisions.
2. The auditor should not audit his/her own work or provide nonaudit services in situations where the nonaudit services are significant/material to the subject matter of the audit.
165p. 8-8
Differences Between theAICPA and GAS
Differences between the AICPA Code of Professional Conduct and Government Auditing Standards include:o Post-impairment period o GAO standards – “structural threat”o Subject external consultants and specialists
to both independence standards and the assessment of independence
o Contain guidance on documentation necessary to support adequate consideration of auditor independence
166p. 8-9
Prohibited NonauditService Categories
Bookkeeping and preparing accounting records
Preparing financial statements Internal audit services Internal control and monitoring and
assessments Information technology systems
services Valuation services
167p. 8-10
Chapter 9
Privileged Confidentiality, Communication, and Other
Considerations61H1-23 FAC
168
Learning Objectives …
p. 9-1
Learning Objectives
Describe “privileged communication” between a CPA and client under Florida statutes and rules
Describe the disposition of client records per national and Florida rules
Define the term “client record” (AICPA 501-1) Describe the implications to the CPA of verifying a
“comfort letter”
169p. 9-1
Learning Objectives (cont.)
Describe what is permissible in regards to advertising and solicitations of clients per national and Florida rules
Describe the various forms of practice available to a licensee (61H1-26.001)
Describe how a practice can be named and share office space (61H1-26.001)
170p. 9-1
Communications between the Accountant and Client
(473.316, FS)
(1)(c) A communication between an accountant and client is “confidential” if it is not intended to be disclosed to third persons …
(1)(d) A “quality review” is a study, appraisal, or review … conducted by a professional organization for the purpose of evaluating quality assurance required by professional standards, including a quality assurance or peer review
171p. 9-1
Communications between the Accountant and Client
(cont.)
(2) A client has a privilege to refuse to disclose, and to prevent any other person from disclosing, the contents of confidential communications with an accountant … This privilege includes other confidential information obtained by the accountant from the client for the purpose of rendering accounting advice.
(3) The privilege may be claimed by … the client, guardian, personal representative, representative of an organization/ corporation/ association, or the accountant, but only on behalf of the client.
172p. 9-2
Communications between the Accountant and Client
(cont.)
(4) There is no accountant-client privilege under this section when:
(a) The services were sought or obtained to commit a crime or fraud.(b) A communication is relevant to an issue of breach of duty by the accountant to their client or by the client to their accountant.(c) A communication is relevant to a matter of common interest between two or more clients
(5) Communications are not privileged from disclosure in any disciplinary investigation or proceeding
173p. 9-2
Communications between the Accountant and Client
(cont.)
(6) The proceedings, records, and workpapers of a review committee are privileged and are not subject to … legal process or to introduction into evidence in a civil action or arbitration, administrative proceeding, or state accountancy board proceeding. A member of a review committee or person who was involved in a quality review may not testify … Public records and materials prepared for a particular engagement are not privileged merely because they were presented during the quality review.
174p. 9-2
The FAC and Responsibilities
FAC 61H1-23
Two responsibilities: Confidential client information Records disposition responsibility
175p. 9-3
Confidential Client Information
CPAs may not disclose any confidential information obtained in the course of a professional engagement without the consent of the client.
Implies active and stored information Peer Review is excluded
176p. 9-3
Confidential Client Information (cont.)
Confidentiality includes: Office situations Storage in and away of client data Other situations
177p. 9-3
Records Disposition Responsibility
(1) A certified public accountant shall furnish to a client or former client within a reasonable time after request of the document the following if they are in the certified public accountant's possession or control at the time of the request. Any accounting or other records belonging to the client which the certified public accountant may have had occasion to remove from client's premises, or to receive for the client's account, including records prepared as part of the service to the client which would be needed to reconcile to the financial statements or tax return prepared and issued by the certified public accountant.
178p. 9-4
(61H1-23.002)
Records Disposition Responsibility (cont.)
(2) This rule shall not preclude a licensee from
making reasonable charges for costs incurred. A certified public accountant shall not withhold those items contemplated above under any circumstances following a demand for same from the client.
(3) Provisions of this rule apply to Licensed Audit Firms and to all certified public accountants practicing public accounting.
179p. 9-4
(61H1-23.002)
Records Disposition Responsibility (cont.)
If the tax return or financial statement has not been issued, the CPA must only return records received from the client, but this shall not preclude the licensee from making copies of such documents when same form the basis of work done by the CPA.
180p. 9-4
Revisions to Rule 501-1
The revised interpretation: Defines key terms Makes interpretations of how to respond to client
requests.
181p. 9-5
Verification Documents
Requests from banks, financial institutions, and mortgage companies to verify financial information for a client
The risk in responding is significant How should CPAs respond to these requests?
182p. 9-8
Florida’s Public Record LawChapter 119, F.S.
“any public record made or received in connection with the official business of any public body, officer, or employee of the state, or person acting on their behalf unless there is a specific exemption.” Article I, Section 24 (a), Florida Constitution (1968)
183p. 9-12
AICPA Rules on Advertising
Found in ET Section 502 – “Advertising and Other Forms of Solicitation”
Florida rules generally follow the AICPA rules
184p. 9-13
Solicitation
Licensee may reply to requests for proposals
Must adhere to rules for advertising, both oral and written
185p. 9-15
(61H1-24.002)
Responsibility for Other Persons
Licensees may not allow others to do things the CPA themselves may not do
This includes situations for compensation and not for compensation
186p. 9-15
Administrative and Office Considerations
Names, terms, branch offices (61H1-26)
Forms of practice and name shared office space (61H1-26.001)
Minimum capitalization /adequate public liability insurance (61H1-26.002)
Financial statements of the firm
187p. 9-16
AICPA Rulings and Interpretations on Ethics
188p. 9-17
Chapter 10
Code of Ethics for Public Officers and Employees (s. 112
F.S.)
189
Learning Objectives …
p. 10-1
Learning Objectives
Review definitions regarding applicability Review standards of conduct Review restrictions on employment of
relatives Review voting conflicts Review penalties
190p. 10-1
Key Definitions
Agency Breach of public trust Conflicts of interest Gift Purchasing agent Relative See s. 112, Part III, Definitions
191p. 10-2
Standards of Conduct
Solicitation or acceptance of gifts Doing business with one's agency Conflicts of employment or contractual
relationship Unauthorized compensation Misuse of public position Exemptions and other issues Disclosures or use of certain information
192p. 10-4
Chapter 11
Future Implications
193
Learning Objectives …
p. 11-1
Learning Objectives
Name several changes to the accounting profession that could occur within the next 10 years
Highlight several major differences between the IFAC and AICPA ethics codes of conduct
Discuss aspects of the CPA Horizons 2025 Project
194p. 11-1
The Future
To prophesy is extremely difficult … especially with regard to the future
Chinese Proverb
195p. 11-1
Our Future
Where is the CPA profession going?
196p. 11-1
Our Future (cont.)
Changes previously talked about have happened:
Most VERY large audits will be performed by the “Quadropoly”/“Final Four”
XBRL – bar coding of financial statements
Accounting Standards Codification
Mobility
International Implications – US CPA
197p. 11-1
Comparison of IFAC and AICPA Ethics Standards
The AICPA and IFAC have begun to converge the IFAC’s Code of Ethics for Professional Accountants and the AICPA’s Code of Professional Conduct
In 1917, the AICPA’s predecessor adopted eight rules of conduct (one sheet of paper)
The rules evolved and were codified in 1973 into the current AICPA’s Code of Professional Conduct
198p. 11-2
International Ethics
100 years – and many sheets of paper later – the AICPA Code and related guidance is ripe for reorganization
The standard setting organizations in more than 100 countries have adopted the IFAC’s Code of Ethics; many others are in the process of converging with the code
The code will impact those in public practice, business, academia, and government
199p. 11-2
International Ethics (cont)
The IFAC code uses a conceptual framework approach to evaluate relationships or circumstances that raise ethical issues
The AICPA’s and the IFAC’s codes address similar issues:
o Independenceo Objectivityo Due careo Confidentiality
200p. 11-2
CPA Horizons 2025 Report
The AICPA Project, CPA Horizons 2025, sought the insights of 5,600 CPAs on current and future trends that will impact the profession and the world of CPAs.
10 key themes emerged that give insight into the profession:
o Conducting and will conduct businesso Serve clients and employerso Attract and retain employees and new businesso Remain competitive in the marketplace for the next
15 years
201p. 11-5
Theme 1. Technology
Understand and leverage relevant technology in conjunction with core CPA competencies to deliver superior services
202p. 11-5
Theme 1. Technology (cont.)
IMPACT ON THE PROFESSION Stay current with, embrace and exploit
technology for increased efficiency and expansion of services
Find solutions to offer investors and stakeholders up-to-date, real-time financial information and to increase transparency
Embrace mobile technologies and social media Fraud may be easier to commit and more
difficult to prevent and detect
203p. 11-5
Theme 2. Pre-certification and Lifelong Learning
Evolve the educational framework to keep pace with the changing dynamics of business, government and our profession
204p. 11-6
Theme 2. Pre-certification and Lifelong Learning (cont.)
IMPACT ON THE PROFESSION Devote time to staying current with regulations
and standards, and worldwide trends Further develop interpersonal skills to enhance
relationships Embrace real-time learning in the workplace to
learn and adapt quickly and knowledgeably Requirements for new CPAs must remain rigorous
and demanding and be practical and relevant New CPAs must have a broad knowledge of
business and soft skills and not simply focus on technical accounting
205p. 11-6
Theme 3. Worldwide Profession
Position the CPA as a premier designation of the accounting and finance profession throughout the world
206p. 11-6
Theme 3. Worldwide Profession (cont.)
IMPACT ON THE PROFESSION Be increasingly aware of international business
issues and trends Assess the trend toward outsourcing overseas
and create opportunities to expand services to serve these markets
Continue to market the quality and value of their services to expand and thrive globally
207p. 11-6
Theme 4. Pride in the Profession
Encourage pride among CPAs in the CPA profession and in the value CPAs create throughout society
208p. 11-6
Theme 4. Pride in the Profession (cont.)
IMPACT ON THE PROFESSION The profession must continue to advocate on
behalf of itself to ensure continued recognition as a trusted advisor
Uphold the integrity of the profession and maintain high standards in an ever-changing environment and in cultures where business practices differ from U.S. practices
209p. 11-6
Theme 5. Trusted Attester
Preserve the role of the CPA as the trusted attester of financial and other information
210p. 11-6
Theme 5. Trusted Attester (cont.)
IMPACT ON THE PROFESSION The profession must stay vigilant in defending
its unique role as providers of audit and attest services
All CPAs benefit from the public trust rooted in the provision of audit and assurances services
Audit and attest functions must evolve to meet changing regulatory demands and client and business needs
211p. 11-6
Theme 5. Trusted Advisor
Promote the CPA as the trusted advisor who provides core CPA services and develops solutions to complex business problems
212p. 11-6
Theme 6. Trusted Advisor (cont.)
IMPACT ON THE PROFESSION Continue to evolve as strategic partners of
clients, business and employers, applying multidisciplinary and integrated problem solving to expand traditional services and enhance nontraditional offerings and the perception of trusted advisor
213p. 11-7
Theme 7. Market Permissions
Leverage the strengths of the profession to expand market permissions
214p. 11-7
Theme 7. Market Permissions (cont.)
IMPACT ON THE PROFESSION Emerging opportunities for specialization will
allow CPAs to strengthen their expertise and provide additional value to clients, employers and business
Continue to evaluate which services are offered locally and globally and how to deliver these services to adapt to the needs of clients, employers and business
215p. 11-7
Theme 8. Marketplace
Address continual changes in the marketplace, economy, businesses and regulations
216p. 11-7
Theme 8. Marketplace (cont.)
IMPACT ON THE PROFESSION The nature of the work that CPAs perform must
evolve to respond to shifts in business, society and technology
Changes will offer opportunities to enhance the value of CPA services
Lifelong learning will take on greater importance as a way for CPAs to stay up-to-date
217p. 11-7
Theme 9. Value Proposition
Increase the visibility of the profession’s value proposition by demonstrating the profession’s Core Values in multiple areas of business and society
218p. 11-7
Theme 9. Value Proposition (cont.)
IMPACT ON THE PROFESSION By listening to and understanding the needs
and challenges of employers and clients, opportunities for CPAs to develop services that align with Core Values will emerge
The profession must spend more time demonstrating their value to clients, businesses and the public about the role and value of the CPA in order thrive amid increased competition and economic pressures
219p. 11-7
Theme 10. Demographic Shifts
Continue to offer opportunities that enhance the appeal of the profession and be proactive in addressing both U.S. and global demographic shifts
220p. 11-8
Theme 10. Demographic Shifts (cont.)
IMPACT ON THE PROFESSION Strive to reflect the demographic shifts of
incoming accounting students, clients, business and society
Programs offered to support minorities, women and young CPAs in the workplace must be more widely implemented
Experienced and older CPAs must continue to mentor young CPAs and identify leadership and advancement opportunities
221p. 11-8
10. Demographic Shifts (cont.)
Increase flexible work arrangements and work-at-home options
Continue to support and enhance programs that build awareness of the CPA profession to young audiences
222p. 11-8
EMBRACING THE FUTURE
223p. 11-8
What Have We Learned?
It is a small world after all — every business is becoming a global business
The future is here — embracing the future now will ensure viability in the long run
Change is inevitable — technology already is changing the way we work … and the change will continue
Generations are working side by side — Baby Boomers are not retiring and Millennials are bringing a new set of skills and ideals to the workplace
224p. 11-8
What Must We Do?
Be open to change — embrace, don’t fear, the future
Be nimble — adapt traditional services and establish new ones to take advantage of change
Be collaborative — work with each other and with the global community to shape and execute the standards and services that will emerge over the next decade
Be forward-thinking — assess and evaluate the current and future environments and plan accordingly
225p. 11-8
How Do We Do It?
Technology: Address security and privacy concerns; adapt traditional services; utilize state-of-the-art tools to reach out to new markets
Education: Balance judgment with technical skills; teach soft skills; stay ahead of the curve on regulations and standards
Globalization: Understand international issues, trends, standards and regulations; identify new markets; explore new job opportunities
226p. 11-9
How Do We Do It? (cont.)
Promotion: Market the profession’s virtues of integrity, objectivity and trust to local, national and international audiences
Collaboration: Understand the different perceptions and realities of the generations and find ways to bridge the gap and take advantage of the best each can offer
Integration: Review our competencies and align them with new realities; enhance our role as a business advisor
227p. 11-9
How Do We Do It? (cont.)
Adaptation: Address changes in the marketplace, economy, business and regulations; immerse ourselves in domestic and international trends
Competition: Understand the numerous choices available to clients and employers; market the CPA value
228p. 11-9
Welcome to the future!
p. 11-9 229
Take Away …
Remember that for over 100 years the profession of certified public accountants have been kept at the top of the ethical list for the professions with:
o Honesty
o Trustworthiness
o Integrity
o Objectivity
230p. 11-9
The Reason for this is Simple …
Our professional ethics
231p. 11-9
Thank You for your attention today …!
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