PLACE : 500 N. Calvert Street, 3Rd Floor Conference Room, Baltimore

MINUTES

BOARD OF PUBLIC ACCOUNTANCY

DATE : October 3, 2005

TIME : 10:30 a.m.

PLACE : 500 N. Calvert Street, 3rd Floor Conference Room, Baltimore, Maryland 21202

PRESENT : Jacob J. Cohen Leslie A. Mostow Arnold Williams Michele L. Pittman

ABSENT : Craig Bancroft Barbara R. Stewart Thomas Chambers OTHERS PRESENT : Harry Loleas, Deputy Commissioner Dennis L. Gring, Executive Director Daphne Thomas, Management Associate Matthew Lawrence, Counsel to the Board Bert Fenwick, Consultant Sandy Steinwedel, MSA Ron Grafman, MSA Richard Jones, MSA Charles Egender, MSA Donald Hull, MSA Mary Beth Halpern, MACPA

CALL TO ORDER

The meeting was called to order by the Chair at 10:30 a.m.

MINUTES

The August, 2005 minutes were deferred to the next meeting, November 8 th, when a full Board would be present.

REPORT OF THE CHAIR

The following is the text of the remarks of Jacob J. Cohen, Chairman of the Board of Public Accountancy:

“ I apologize for starting the meeting late. Now that we have a quorum, we will have a reasonable expeditious meeting.

I received a notification from the AICPA that a Maryland license holder has been disciplined by the AICPA. I referred the matter to the Complaint Committee for further action. The reason I am noting this in my monthly report is to indicate that the AICPA is taking seriously the pledge of transparency and openness. October 3, 2005 Page 2

REPORT OF THE CHAIR CONTINUED

I also received an e-mail from Tom Sadler, Chair of the Compliance Assurance Committee. To assist the Compliance Assurance Committee in gathering from state boards input on operating and suggestions for improving their oversight, the Committee plans to hold roundtable discussions with knowledgeable representatives from appropriate state boards. Mr. Sadler is therefore asking us to identify someone who could be our Board’s roundtable representative. Since Tom Chambers heads our Peer Review Task Force for the purpose of promulgating regulations, I recommended him and he graciously accepted.

The NASBA Board approved the distribution of several proposed changes to the Bylaws. The changes which I circulated to you through e-mail involve five (5) sections of article V and VI changing certain terms and clarifying that members and alternates of the Nominating Committee are elected. The proposed changes will be voted during the October Annual Business meting and I intend to vote or the changes unless I hear from you.

I received from NASBA the quarterly Regional Directors’ Focus Questions and circulate them through e-mail to all of you. Please provide Dennis Gring or me any input by the end of the month since the deadline for responses is October 7, 2005.

I received from Wesley Johnson a detailed memo on the proposed new education rules cited in UAA exposure draft. Wes encouraged us to respond to the exposure draft. Our response was transmitted to NASBA before the August 26 deadline as prepared by Dr. Stewart. I would like to take the opportunity to thank Dr. Stewart or analyzing, leading the discussion and drafting the Board’s response to the UAA draft.

NASBA announced that a pilot program for the US Accountancy Licensing Database is progressing on schedule. This will provide our board another means of working together with other boards and share data to simplify various procedures for reciprocity, license granting, violations and investigations.”

EXECUTIVE DIRECTOR’S REPORT

The following is a summary of the report of Dennis L. Gring, Executive Director:

Uniform CPA Examination Examination scores from the July-August Window have been reported to the Board and are available to candidates on the website. The results of 478 of the 507 examination sections have been reported to date. Of these examination scores, 41 candidates have successfully passed the examination and are eligible to complete the process toward licensure. A full analysis of candidate performance will be reported at the November meeting.

Disciplinary Actions On September 1, 2005, the Board began posting its disciplinary actions on the website. Disciplinary actions will be posted after the effective date of a final action of the Board or an effective date of a consent agreement. October 3, 2005 Page 3

EXECUTIVE DIRECTOR’S REPORT CONTINUED

CBT Symposium The NASBA CBT symposium, held on September 13th, was sponsored by the three partners who provide the administration of the computer based exam, NASBA, AICPA and Prometric. State Boards were briefed on the progress of the exam and plans for future modifications and improvements.

Notification A briefing paper which analyzes the education, examination and experience requirement for licensure in other states was presented. The Board later used briefing determine the states that meet the “substantial equivalency” standard as of October 1, 2005, pursuant to notification legislation that was passed in 2005.

INFORMAL MEETING – APPLICANT APPEALS

The following applicants appealed to the Board in person as a result of the denial of their examination applications:

Adekoye Mayowa - Denied for the lack of three semester hours in written communications. Took “BUED 307 Communications in Business/Business Communication” at Morgan State University as evidenced by information provided by an instructor. The information described how the course contained both oral and written communications. Mr. Mayowa also took his oral communications at Morgan which was entitled “SPCH 101 Fundaments of Speech” which also contained written communications.

Cathleen Frey - Denied for the lack of an acceptable general management course. She distributed correspondence to the Board and explained the school’s process, showing the courses offered at UMBC including the ones she had taken “ECAD 489 Management and Administrative Seminar” and “ECON 408 Managerial Economics.” Having elaborated on other courses that contained management, Ms. Frey concluded that she had taken the exam as a Maryland candidate in 1992 and her education satisfied the requirements at that time.

EDUCATION COMMITTEE’S REPORT

On behalf of Dr. Stewart, Ms. Thomas made the following report: Fifty-four (54) applications were administratively approved with the majority having been Internet transactions. The following applications were denied:

Transfer of Grades Applications

Wenqin Zhao - Did not meet Maryland’s educational requirements when he applied for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 in 10 rule.

Derek Barto - Did not meet Maryland’s educational requirements when he applied for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 in 10 rule. October 3, 2005 Page 4

Transfer of Grades Applications Continued

Michele Gurbatow - Did not meet Maryland’s educational requirements when she applied for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 in 10 rule.

Michael Korsinsky - Did not meet Maryland’s educational requirements when he applied for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 in 10 rule.

Robert Pavese - Did not meet Maryland’s educational requirements when he applied for the examination in the other jurisdiction. Can only retake the examination under Maryland’s 150 hour requirement, or meet the 150 hour requirement, obtain an original license in another jurisdiction, then reapply to Maryland for reciprocity or reapply under the 4 in 10 rule.

Reciprocal Applications

Megan Senkowski - Did not meet Maryland’s educational requirements when she obtained her 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 in 10 rule.

Jason Danielson - 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 in 10 rule.

Ramz Farag - 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 in 10 rule.

Daniel Wise - Invalid experience years. When he obtains more current experience, he can reapply for reciprocity.

Shara Rosenow - Official uniform CPA examination grades never received as requested in 2003, 2004 and 2005.

Foluke Kolade - 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 in 10 rule.

It was moved (II) by Mr. Williams, seconded by Mr. Mostow and unanimously carried to approve the Education Committee’s report. October 3, 2005 Page 5

EXPERIENCE COMMITTEE REPORT

Ms. Pittman reported that twenty-seven (27) RPEs were reviewed and approved.

It was moved (III) by Mr. Williams, seconded by Mr. Mostow and unanimously carried to approve the Experience Committee’s report.

CODE OF ETHICS TASK FORCE

Mr. Mostow stated that he attended the NASBA’s September 14th PCOAB meeting, finding that the Chair has resigned his position. An important part of their function is to publicize good things, but unfortunately, the media puts out negative articles. He stated that the meeting was well attended.

In keeping the Board abreast, according to Mr. Mostow, AICPA has another proposal on ethics for review.

NOTIFICATION

After review and discussion of the briefing paper on CPA licensing requirements in other states, and upon a motion by Mr. Williams and seconded by Ms. Pittman, the Board determined that for the purpose of implementation of the notification legislation the following states were substantially equivalent to Maryland in their licensure requirements for CPAs:

Individuals who base their notification application upon their licensure in these states will only need to provide the Board with documentation through the state’s verification of licensure certificate (“Certificate of Good Standing”). Individuals who apply from states not listed can still file a notification application, but will have to document that they meet the 150 hour educational and one-year of experience requirements in addition to documentation of licensure in “good standing.”The list will be updated as the educational, experience and examination requirements of additional states become substantially equivalent to Maryland‘s.

OTHER BUSINESS

The Chair asked Mr. Fenwick to report on the finding of his recent audition of CPE’s claimed by individuals renewing their licenses. Mr. Fenwick proceeded with stating that out of a 100 random sample of licensee’s CPE substantiation, the following problems/actions are noted:

51% decreased claimed CPE 31% carry forward problem 12% had to make-up shortages 18% excess self-study 16% bad addresses October 3, 2005 Page 6

OTHER BUSINESS CONTINUED

Mr. Fenwick attributed these problems to the current honor system, which replaced the detailed CPE Reporting Form (which was discontinued in 1998). He felt that most CPAs take a guess at the credits when recording the credits and sometimes, include the carry forward in the number of new CPE credits. He cited the case of one licensee who claimed his records were burned in the 9/11 event, but most of his courses were taken after that date. Further, Mr. Fenwick stated that licensees do not seem to care anymore and appear to be lax when presented with the problems. Mr. Fenwick also said that discussion leaders lack the required qualifications with quite a few group study courses being disallowed. In the area of the bad addresses, Mr. Fenwick expressed difficulty in contacting licensees who did not provide the Board with a current address.

The Chair questioned if the CPAs corrected the shortages once notified. If not, was a complaint file opened? He also asked how the Board would remedy the problem – more penalties, change the procedures? Expressing that a record of a licensee’s CPE courses may be needed, Mr. Gring felt that some electronic remedy could be the ultimate solution. Mr. Gring reiterated that this is another reason why special funding is so important as the Board cannot effectively discharge all of its responsibilities under the statute with its current resources.

Mr. Gring added that the Real Estate Commission resolved its problem with licensees who could not document CPE claimed at renewal by issuing charges for fraudulently obtaining a license. Most individuals charged entered into consent agreements and paid a substantial civil penalty. However, he stated that comprehensive changes would require significant monies for information technology which is not currently available. The process would randomly select licensees at the time they transacted their renewal and notify them that they have 30 days to provide documentation of the CPE credits they claimed.

Mr. Mostow asked that, in the interim, could wording be inserted next to the box where credits are inserted indicating that “failure to report correct hours could result in suspension, etc.” Mr. Williams was in favor of the process outlined above, which is comparable to the District of Columbia’s methods as when a licensee exits the system, documents are provided to the Board. He also stated that it could be a random procedure and that the Board has the responsibility to make decisions based on that duty.

In conclusion, a subcommittee consisting of Messrs. Williams, Fenwick and Gring will report on recommendation to improve the CPE audit process at the November meeting.

EXECUTIVE SESSION

It was moved (IV) Mr. Mostow, seconded by Ms. Pittman and unanimously carried to go into Executive Session at 11:30 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. October 3, 2005 Page 7

COMPLAINTS

It was moved (V) by Mr. Mostow, seconded by Mr. Williams and unanimously carried to approve action on the following complaints as noted:

Closed - CPAS030028, CPAS060001, CPAS060003, CPAS060004, CPAS030028 (Consent Agreement) Opened - CPAS060009, CPAS060010, CPAS060011

OTHER BUSINESS

It was moved (VI) by Ms. Pittman, seconded by Mr. Williams and unanimously carried to approve special accommodations - double time and a separate room - for an examination candidate.

It was moved (VII) by Mr. Mostow, seconded by Ms. Pittman and unanimously carried to approve release of a renewal and original license who responded positively to the conduct questions when applying.

It was moved (VIII) by Ms. Pittman, seconded by and unanimously carried to approve the examination applications of both applicants appearing before the Board this date – Cathleen Frey and Adekoye Mayowa.

The Board was in receipt of another Exposure Draft on the UAA which especially responded to the perplexing question of the application of the 150 hour requirement/substantial equivalency toward “Notification.”. Having found that few states were substantially equivalent to the State of Maryland insofar as the three “E’s”, this new draft allows the Board to accept states wherein the 150 hour requirement was met by licensure, not the examination.

ADJOURNMENT

There being no further business, the meeting adjourned at 12:30 p.m.

______With corrections

______Without corrections

______Chair Date