MINUTES
BOARD OF PUBLIC ACCOUNTANCY
DATE : June 1, 2004
TIME : 9:06 a.m.
PLACE : 500 N. Calvert Street, 3rd Floor Conference Room, Baltimore,
Maryland 21202
PRESENT : Jacob J. Cohen
Barbara R. Stewart
Thomas S. Chambers
Leslie A. Mostow
Arnold Williams
Craig Bancroft
ABSENT : Michele L. Pittman
OTHERS
PRESENT : Harry Loleas, Deputy Commissioner
Dennis L. Gring, Executive Director
Daphne Thomas, Management Associate
Matthew Lawrence, Counsel to the Board
Bert Fenwick, Consultant
David Churchman, MSA
Shirley Buchanan, MSA
Carol Kirwan, MACPA
CALL TO ORDER
The meeting was called to order by the Chair at 9:06 a.m.
MINUTES
It was moved (I) by Mr. Williams, seconded by Dr. Stewart and unanimously carried to approve the minutes of the meeting held May 4, 2004 with corrections.
REPORT OF THE CHAIR
The following are the remarks of Jacob J. Cohen, Chairman of the Board of Public Accountancy:
“I was invited to attend the AICPA Council meeting May 23rd to 25th in Phoenix, Arizona and spent the three days at the meeting as an observer. There were three other members of the Maryland Board at the meeting including Mr. Wes Johnson, a past Chairman of our Board.
One of the actions debated by Council related to the peer review program and the need to change it to meet current developments. The peer review program was originally developed to be a confidential, educational and remedial program. The regulatory and economic climate has changed since peer review was established and the expanded user group expects greater transparency of the program.
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REPORT OF THE CHAIR CONTINUED
Achieving such transparency is in conflict with the Institute agreement with its members for confidentiality of the peer review programs. Accordingly, requiring increased transparency of peer review information would require a member referendum.
The National Association of State Boards of Accountancy (NASBA) is working to amend the Uniform Accountancy Act (UAA) Rules to provide a requirement for greater transparency of peer review information.
This provision would put the UAA rules in direct conflict with the Joint AICPA/NASBA UAA Statute and would not be consistent with our licensee’s expectations that the peer review process would retain its original basis of confidentiality.
After a long debate, Council members passed a resolution directing AICPA staff to initiate a member education program and ultimately holding a member referendum to make the peer review program more transparent and grant access to State Boards of peer review information.
Since this Board passed unanimously a motion requiring mandatory peer review sometime ago, the AICPA Council action is of great interest to us in Maryland.
The AICPA retained the responsibility of amending the Uniform Accountancy Act while NASBA is working on amending the UAA rules.
For your information, I was appointed to NASBA’s UAA Rules Committee preparing and/or amending the UAA rules and I will keep you up-to-date with any changes in the future.”
EXECUTIVE DIRECTOR’S REPORT
Mr. Gring provided the Board with an update on the registration and administration of the CPA Exam, passing out a graph entitled “Trends for the First Month.” He stated a graph will be provided to the Board for the next several months. He added that $69,000 has been collected in examination fees and the first invoice from NASBA is due today. He elaborated that of the 145 original applications received, 80 have been approved; 33 denied; 5 of the 33 either are personally appearing before the Board today or have correspondence for review; and 11 applications are in pending. He also commented that primary reasons examination applications are denied are due to the failure of candidates to have completed a business ethics course or courses in oral and written communications.
During the first month of the CBT process, the Board’s end went well, but NASBA had the typical start up inherent in a project of this magnitude and scope. Mr. Gring said that the first administation window closed May 29, 2004. The next testing window begins with July 1st. Mr. Gring further stated that on or about June 30th, the grades will begin to be transmitted to the Board.
Dr. Stewart inquired as to how many candidates took the exam to which Mr. Gring responded that he had just received a report, but he could not decipher it in time for this meeting, but will report at the next meeting as he is awaiting additional clarification.
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EXECUTIVE DIRECTOR’S REPORT CONTINUED
Dr. Stewart remarked that a candidate she spoke to thought the system was operating beautifully.
In response to Mr. Bancroft’s questioning of a contract, Mr. Lawrence explained the
processing of the contract. Mr. Bancroft suggested reducing the issues to writing. Mr.
Gring replied that NASBA generates a weekly report of system problems and a timetable for resolution. Mr. Gring said he will catalog each problem and refer them to NASBA for resolution.
· Mr. Gring reported on the result of his survey of state boards of accountancy regarding whether other states limit the amount of time that is permitted to elapse between an individual’s passage of the CPA exam and the individual’s application for an original license. According to the survey, in which 38 of 54 jurisdictions responded, only four states currently impose additional conditions on candidates who apply for an original license after a period of time has elapsed since passage of the CPA Exam: Virginia (10 years and if after 3 years, CPE is required), Vermont (8 years), Florida (2 years, and must take exam thereafter) and Mississippi (5 years).
· Mr. Gring asked for the Board’s recommendation for legislation in 2005 as early as possible. Mr. Loleas requested that the Board prioritize their selections. He advised that special funding legislation would be a departmental issue and that the Board should focus on other areas of concern.
· Mr. Gring advised the Board that HB145 was signed last week which expands the disciplinary options and will go into effect in October 1, 2004.
· Mr. Gring disseminated licensing data to the members for their information.
· Mr. Gring stated that any contributions will be welcome for the first Board electronic newsletter which has a target publication date in July. Interested parties could go to the Department’s website and see the design board’s newsletter for an idea of how an electronic newsletter appears as produced in the Department.
· Mr. Gring informed the Board that he worked with Ms. Linda Rhew, Examination Coordinator, to develop a foreign credentials checklist and explained that additional information will be requested.
EDUCATION COMMITTEE’S REPORT
Dr. Stewart apprised the Board that Ms. Thomas had administratively approved four (4) reciprocal applications since the last meeting of which all four were Internet transactions.
Denied Transfer of Grades
Jeffrey Sarashon - Did not meet Maryland’s educational requirements when he applied
for the examination nor did he meet the conditional credit requirement
when he sat for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet
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the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 and 10 rule.
Robert Pate - Did not meet Maryland’s educational requirements when he
obtained his initial license in the other jurisdiction.
Can only take the required courses, under the 150 hour requirement
and obtain an original license in another jurisdiction, then reapply to
Maryland for reciprocity or reapply under the 4 and 10 rule.
It was moved (II) by Mr. Mostow, seconded by Mr. Chambers and unanimously carried to approve the Education Committee’s report.
EXPERIENCE COMMITTEE’S REPORT
On behalf of Ms. Pittman, Ms. Thomas reported that twenty-one (21) of the twenty-two RPE’s reviewed by Ms. Pittman were approved. The one denied was for no signature of the applicant. It was moved (III) by Mr. Williams, seconded by Dr. Stewart and unanimously carried to approve the Experience Committee’s Report.
INFORMAL MEETINGS
The Board conducted informal meetings with the following denied examination candidates as follows with Mr. Lawrence providing the proceeding for this informal process:
Tushar Rathod - Mr. Rathod explained that his undergraduate degree is in mechanical engineering and he has a MBA in Finance. He passed out three (3) documents to the Board (1) his formal letter (2) his scholastic sheet and (3) the checklist. Dr. Stewart noted the exemption for written communications, not oral communications (as stated in his letter) as he has a master’s degree. He spoke of having taken a course from Anne Arundel Community College that he felt would meet the oral communications requirement. After some discussion, Dr. Stewart advised Mr. Rathod that Ms. Linda Rhew, Exam Coordinator, would have to re-evaluate his application now that he has provided a completed checklist.
William Teachum - Mr. Teachum stated that when he was originally denied by Ms. Port, he had been informed that he was short one credit in business finance. However, after reapplying and speaking with Mr. Gring, he was advised that he was eleven (11) credits short as his school, Benjamin Franklin University, was not accredited. He stated that Mr. Gring suggested his finding a school which would accept his Benjamin Franklin credits that were not accepted by his other school, Strayer University. Asked by Dr. Stewart if he had been successful, his response was negative because he had recently received the denial letter. Dr. Stewart asked why Strayer did not accept the credits, he responded that it was because of the grade received “C-.” In total, Mr. Teachum stated that he had completed 66 credits at Benjamin Franklin.
Brian Schobel - He was originally denied by Ms. Port for the lack of business ethics, oral communications and written communications. Upon reapplication, he was again denied, but for general management which was not mentioned in the original denial. He felt that the course should be waived, in his case given the circumstances, or the course taken, “Applied Management Sciences” should be accepted.
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WRITTEN APPEALS
In line with the above personal appearances, the Board continued with written appeals from denied examination candidates as follows:
Brandi Gaudet - Denied for the lack of a number of courses once she finally obtained a foreign credentials evaluation. The Board concurred with the previous denial.
Edward Lake - Attended an institution that was on the quarter system and was subsequently denied due to the Examination Coordinator finding only 2.68 semester hours, opposed to the required 3, in statistics, general management, oral communications and U. S. business law. Mr. Lake appealed to the Board to accept his credits already earned in those areas as full satisfaction of the three-credit courses.
OLD BUSINESS
In line with Mr. Gring’s report regarding a time limitation for original applicants, Dr. Stewart felt that one who passes the exam and lets a significant amount of time elapse before applying for a license is basically like someone on inactive status and therefore should have the CPE when he/she finally applies. Mr. Mostow agreed and pointed out that this is a legislative issue. All Members concurred with Dr. Stewart and the Board will consider this matter with other legislative issues.
On the matter of the patterns of late CPA renewals, the Board did not favor a sliding late fee, but discussed imposing additional CPE which could possibly result in an administrative burden. According to Mr. Gring, warnings about the consequences of not renewing in a timely manner can be included in the general renewal notice that is mailed to licensees 60 days prior to the license expiration date. Dr. Stewart requested that a caption for licensees practicing without a license be put in bold print. Mr. Mostow favored adding an e-mail, in addition to the 60 day reminders, 10 days prior to renewal. Mr. Gring stated that he would look into automation of such e-mails. Dr. Stewart added that maybe after six months, the Board should look at the figures for improvement. She also felt that the late filing fee ($60.00) should be increased.
NEW BUSINESS - LEGISLATION
Mr. Gring reminded the Board that the Departmental deadline is August 1st for any legislative initiatives. The Board decided the following two items are priority:
(1) Mandatory Peer Review
(2) Section 23 of the UAA (Substantial Equivalency)
Mr. Mostow explained substantial equivalency. Under substantial equivalency, licensed CPAs from other states would be permitted to offer CPA services in Maryland by simply notifying the Board, provided that the CPA was licensed in a state which substantially equivalent educational and experience requirements as Maryland and that the CPA did not intend to locate in Maryland. The out of state CPA would consent to the Board’s jurisdiction over the CPA’s activities in Maryland. Mr. Lawrence remarked that by not requiring verifications, there may be potential liability issues or potential liability. Mr. Chambers asked Mr. Lawrence for copies of already drafted bills on these areas which Mr. Lawrence concurred with reporting at the next meeting.
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EXECUTIVE SESSION
It was moved (IV) by Mr. Chambers, seconded by Mr. Mostow and unanimously carried to go into Executive Session at 11:10 a.m. in the 3rd Floor Conference Room, 500 N. Calvert Street, Baltimore, Maryland 21202. The purpose of this session was to consult with counsel. This session is permitted to be closed pursuant to State Government Title Section 10-508(a), (7). Upon completion of the session, the Board resumed their public meeting at 11:40 a.m.
COMPLAINTS
It was moved (V) by Mr. Williams, seconded by Mr. Chambers and unanimously carried to approve the following report:
Two (2) cases - CPAS0400039 and CPAS0400040 to Assistant Attorney General’s Office for precharge; and CPAS 0400004 for an investigation.
INFORMAL MEETINGS RESULTS
Tushar Rathod - As advised, his file will be returned to the Examination Coordinator for re-evaluation.
William Teachum - It was moved (VI) by Mr. Williams, seconded by Mr. Chambers and carried 4-2 to approve Mr. Teachum’s application to sit for the CPA examination.
Brian Schobel - It was moved (VII) by Mr. Williams, seconded by Mr. Chambers and unanimously carried to approve Mr. Schobel’s application to sit for the CPA examination.
OTHER BUSINESS
Edward Lake - It was moved (VIII) by Mr. Mostow, seconded by Mr. Bancroft and unanimously carried to approve Mr. Lake’s application to sit for the CPA Examination.
ADJOURNMENT
There being no further business, the meeting adjourned at 11:51 a.m.
______With corrections
______Without corrections
______
Chair Date