Arkansas Federal Tax Institute December 4, 2014

Transcription

1 Arkansas Federal Tax Institute December 4, 2014

2 Partner with Hudson, Cisne and Company in Little Rock, Arkansas.

3 Partner with Turner, Williams & Associates, Searcy, AR.

4 Partner with Jones & Company LTD, Jonesboro, AR.

5 Owner of Robert Redfern, CPA, P.A. in Danville, Arkansas.

6 Accounting Professor at the University of Arkansas at Little Rock. Serves as the board s education member.

7 Retired Arkansas State Police employee. Serves as 1 of 2 public, non CPA board members.

8 Retired school teacher Serves as 1 of 2 public, non-cpa board members. Also serves as our senior citizen advocate board member.

9 ACA Inactive CPAs may not prepare tax returns or furnish advice on tax matters. Does not apply to attorneys practicing under his or her law license. Code of Conduct Rule 411 The willful failure by the licensee to file an income tax return, including his or her own, and the resulting conviction, plea of guilty or nolo contendere in connection therewith, shall be considered conduct discreditable to the public accounting professsion

10 Code of Conduct Rule 102 In the performance of professional services, a licensee shall maintain objectivity and integrity, shall be free of conflict of interest, and shall not knowingly misrepresent facts nor subordinate his or her judgment to others. In tax practice, however, a licensee may resolve doubt in favor of his or her client as long as there is reasonable support for his or her position.

11 Board Rule 8 Professional Standards licensees who are tax practitioners are expected to comply with applicable standards such as the AICPA Statements on Standards for Tax Services and the Treasury Department Circular 230.

12 AICPA Statements on Standards for Tax Services 1) Tax return positions 2) Answers to questions on Returns 3) Certain Procedural Aspects of Preparing Returns 4) Use of estimates 5) Departure from a position previously concluded in an Administrative Proceeding or Court Decision 6) Knowledge of Error: Return Preparation and Administrative Proceedings 7) Form and Content of Advice to Tax payers

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14 Increases the maximum fine amount from $1,000 to $10,000 per violation and allows us to recover costs incurred while investigating a complaint / problem. Maximum fines in surrounding states: Mississippi - $5,000 Texas - $100,000 Louisiana - $2,000 Oklahoma - $25,000 Missouri - $2,000

15 Adds Agreed Upon Procedures Reports to our Quality Review Program, consistent with Peer Review standards. Removes obsolete / outdated language from our statutes. Adds definitions for the following terms: Home office Principal Place of Business

16 Clarifies what firm names may and not be used. Firm names cannot be misleading as to the legal form or ownership of the firm as well as the # of CPAs working in the firm. Allows for use of network firm names if there is a legitimate business connection. Must share profits / costs, common business strategy, significant professional resources, OR common quality control policies and procedures that are implemented and monitored.

17 Clarifies the authority of the board and the personal liability of Board members. Board members are immune from personal liability for actions taken in good faith in the discharge of the board s responsibilities.

18 Grants CPAs who provide expert witness testimony an exemption of the requirement in Arkansas law to have a Private Investigator s License. Exemptions were originally granted to lawyers, engineers, insurance adjusters, etc. but not accountants.

19 Rule 3 - Changes to 150 hour requirement Candidates may now sit for exam after completion of bachelor s degree. 30 hours of upper level accounting courses and 30 hours of business courses will still be required. Still must have 150 hours to be licensed as a CPA Currently only 9 jurisdictions require 150 hours to take the exam: Alabama Kansas Louisiana Mississippi Nevada Oklahoma Oregon Puerto Rico Texas

20 Rule 3 - Changes to 150 hour requirement Candidates who pass all four parts will have 3 years to complete the education requirements for licensure. Candidates who are unable to complete the 150 hour education requirement within 3 years do to extreme hardship (medical or other) may apply to the Board for an extension.

21 Rule 7 Notification of Firm changes (30 days) Formation of new firm Addition of partner, member or shareholder Retirement, withdrawal, or death of partner, member, or shareholder Any change in the name of the firm Dissolution of the firm Change in management of any firm locations within the state Establishment of a new office location providing accounting services in Arkansas or the closing or change of address of an office location in Arkansas The occurrence of any event that would cause a firm to not be in conformity with the provisions of Accountancy law or rules.

22 Rule 8 makes reference to professional standards evergreen Current rule states professional standards.as in effect on September 12, 2005 New language = professional standards.as in effect at the time the professional services were provided.

23 Rule 9 Communication of change of address or business affiliation Licensees are already required to report change of employment, home mailing address, and business address within 30 days of change. New rule now requires reporting change of address.

24 Rule 13 Continuing Professional Education Current content requirement = 24 of 40 hours must be in following fields of study: Accounting and auditing, ethics, tax, computer science, or management advisory services. New content requirement = 20 of 40 hours must be in accounting and auditing, ethics, or tax. New rule to allow pro rated CPE during first year of licensure. Clarification on college courses taught for CPE credit courses must be upper level college courses and may only be used for CPE once in a three year period.

25 Rule 13 Continuing Professional Education Clarification on Computer Science courses allowed courses must have a connection to the practice of accounting, auditing, or taxation. Courses in the following areas may not be used for CPE spirituality, personal health/fitness, sports and recreation, foreign languages and cultures, or other subjects which do not contribute to the professional competency of the licensee. New licensees are exempt from ethics hours requirement until their first full year of licensure.

26 New retired Status Licensees who represent to the board that they do not intend to receive in the future any earned compensation for current personal services qualify for Retired Status. No CPE requirement or annual registration / payment of licensing fees. Retired licensees may not provide accounting services. Volunteer accounting work is allowed if no compensation received and the licensee does not sign any documents as a CPA.

27 Rule 14 Quality Review program Currently we look at audits, governmental audits, reviews, compilations. Beginning in 2014 will also require licensees to submit an agreed upon procedures report, if any have been issued.

28 Rule 15 Safe Harbor Language Specifies that phrase not licensed by the Arkansas State Board of Public Accountancy must not be abbreviated and must appear in a legible fashion so that the public could reasonably be expected to be able to read the statement.

29 Rule 16 Experience Requirement For initial licensure, one year of experience must have been earned within the 3 years preceding the date of application for licensure. Applicants may appeal to the board for an extension of time in cases of extreme medical or other hardships. Also applies for upgrade to inactive status if the CPA has been inactive for 3 or more years.

30 Rule 17 Investigation Costs New rule that spells out what type of costs can be recovered from licensees found to be in violation of Accountancy statutes or rules. Reasonable travel expenses incurred by board staff or third parties engaged by the Board for investigations; Expenses associated with securing testimony from an expert witness; Other professional services secured by the Board in the course of investigating the violation.

31 Code of Professional Conduct Records Client provided records must be provided or returned to the client within 10 business days, regardless of the status of the client s account. CPA or CPA firm cannot charge a fee for providing / returning these records. Licensee-prepared records, such as adjusting journal entries and supporting calculations, must be provided to the client within 20 business days. CPAs can require that outstanding fees be paid before providing copies of these records, and may charge a reasonable fee for providing such records.

32 Code of Professional Conduct Records Licensee work products, such as tax returns or audit reports, maybe withheld if: A) there are fees due to the CPA for the specific work product B) the work product is incomplete C) professional standards require withholding the work product; or D) threatened or outstanding litigation exists concerning the engagement or the CPA s work. Licensees may charge a reasonable fee for providing copies of work products after the originals have been provided.

33 Code of Professional Conduct Records Licensee working papers are items prepared solely for the purposes of the engagement and reflect testing or other work performed by the CPA. Working papers remain the property of the CPA and the CPA is under no obligation to provide copies to clients or other parties unless required by law or requested by the Arkansas State Board of Public Accountancy.

34 Code of Professional Conduct Format of Records No requirement to convert records that are not in electronic format to electronic format or vice versa. However, if the client requests the records in a specific format, and the records are available in such a format within the CPA s custody and control, the client s request should be honored.

35 Code of Professional Conduct Document Retention Documentation or work products required by professional standards for attest services should be maintained in paper or electronic format for at least 5 years. CPAs must also comply with documentation standards required by authoritative regulatory bodies such as the IRS, SEC, or PCAOB. Failure to comply with the more restrictive provisions contained in the regulations of the applicable regulatory body will constitute a violation of Board Rule.

36 Code of Professional Conduct Firm Names A firm may not include the term Associates or Company unless the firm has at least two full time CPAs on staff.

37 Continuing Professional Education One of four ethics hours must be on Arkansas State Board of Accountancy Rules and Laws (effective January 1, 2015) CPE courses provided by a sponsor from outside of Arkansas who has undergone a review by another jurisdiction s Board of Accountancy will be accepted.

38 Mandatory Peer Review reviews and audits CPAs and CPA firms who issues reviews and/or audits will need to have a peer review to renew their license for 2017 Arkansas is one of only a few states left in the country that does not require peer review Recent DOL audit rejections have highlighted the problem Quality Review program would continue through 2016 and then end

39 Definition of Attest Attest means providing the following financial statement services Modified to add any examination, review, or agreed upon procedures engagement to be performed in accordance with the SSAE (Statement on Standards for Attestation Engagements). SSAE 16 (SAS 70) engagements Sustainability reports or any report that states or implies assurance as to the reliability of the attested information

40 Authority to enforce laws/regs against non licensees Max fine would be $5,000 per violation

41 Change requirements for transferring client records Current requirement is no records can be sold or transferred without the consent of the client New law would require giving the client 30 days written notice before transferring the records

42 Prohibit firms from hiring Inactive CPAs Firm/employee can contact the Board before beginning employment with a plan to upgrade to active status Upgrade process must be completed within 6 months

43 Add a process for deceased or incapacitated sole practitioner CPA: When a licensee is incapacitated, disappears, or dies, and no responsible party is known to exist, the Executive Director of the Board may appoint another license or licensees to inventory the files and to take actions as appropriate to protect the interests of the licensee s clients

44 Substandard reports / lack of documentation Failure to respond to Board communications. Dishonest responses to Quality Review surveys CAFA settlements Records disputes Unlicensed firms Inactive CPAs providing accounting services