02 Licensing and Disciplinary Systems Flashcards
Who grants CPA licenses?
State boards of accountancy.
What are the requirements for obtaining a CPA license in most states?
Education (Bachelors + 30 hours of college credit) and CPE
Pass CPA Exam
Experience (2,000 hours)
List the activities for which a CPA license is needed.
Audit or other SAS engagement
SSARS review of F/S
SSAE examination of prospective F/S
Any engagement meeting PCAOB standards
List the items that can cause an automatic expulsion from the AICPA.
Adverse judgment for:
Felony
Failure to file tax return
Filing fraudulent tax return
Aiding fraudulent tax return
Can a CPA licensed in State A who moves to State B practice in State B?
Generally, yes. State boards of accountancy control reciprocity and mobility of a licensed CPA. Reciprocity between states allows a licensed CPA or CPA firm to get a reciprocal license in another state if they move there. Mobility between states allows a CPA who is licensed in one state to offer services (i.e., the privilege to practice) in another state.
What are some reasons a state board of accountancy would revoke a CPA’s license?
State boards have authority to revoke CPA licenses and impose other penalties (such as fines) for such acts as:
1. Fraud or deceit in obtaining a CPA certificate
2. Cancellation of a certificate in any other state for disciplinary reasons
3. Failure to comply with requirements for renewal (e.g., not paying dues, not completing continuing education hours)
4. Dishonesty, fraud, or gross negligence in performance of services or failure to file one’s own income tax returns
5. Violation of professional standards or code of ethics
6. Conviction of a felony or any crime involving fraud or dishonesty
True or False? The Financial Accounting Standards Board (FASB) is responsible for providing financial accounting standards and principles and administering the CPA exam.
False. FASB is responsible for providing financial accounting standards and principles, however the AICPA is responsible for administering the CPA exam.
To whom must a CPA pay license fees in order to maintain a CPA license?
The state board of accountancy of the CPA’s state of licensure.
A member of the AICPA is convicted of filing a fraudulent tax return. What is the likely consequence of this action?
The CPA will likely be expelled or suspended from membership in the AICPA. This is one of the situations that can result in suspension or expulsion without a hearing.
How many public company audits per year does a CPA firm that is registered with the Public Company Accounting Oversight Board (PCAOB) have to perform before it receives an annual inspection from the PCAOB?
CPA firms that audit more than 100 issuers must have an annual inspection by the PCAOB.
State the role of a state society of certified public accountants.
The role of a state society of certified public accountants is to provide accounting education at the state level (CPE).
State Boards of Accountancy have explicit authority regarding …?
State Boards of Accountancy have explicit authority regarding the granting, maintaining, and revoking of a CPA’s license.
Describe the role of the National Association of State Boards of Accountancy.
The National Association of State Boards of Accountancy (NASBA) may assist state boards with licensing services such as determining eligibility, educational credits evaluation, and the application process. However, they do not license CPAs. In addition, NASBA serves in an advocacy role to assist state boards in carrying out their mission.
What is the role of the Internal Revenue Service?
The U.S. Secretary of the Treasury is authorized by the Internal Revenue Code (IRC) to administer and enforce federal revenue laws. The IRS is the agency created to accomplish that purpose. The domain of the IRS covers all federal taxes, including income taxes, excise taxes, payroll taxes, and gift and estate
taxes.
True or False: Treasury Department Circular No. 230 contains the rules for practice before the IRS.
True: Circular 230 has its own set of qualification and discipline rules for tax practitioners.
