STATE OF MARYLAND BOARD OF PUBLIC ACCOUNTANCY MINUTES

DATE: February 2, 2010

LOCATION: 500 North Calvert Street Baltimore, Maryland 21202 Third Floor Conference Room MEMBERS IN ATTENDANCE: Elizabeth S. Gantnier H. Terry Hancock Tim Murphy Ella Pierce Marjorie Root Raymond C. Speciale

ABSENT: Muhammad A. Khan

DLLR OFFICIALS/STAFF: Dennis L. Gring, Executive Director Linda L. Rhew, Administrative Officer Stanley J. Botts, Commissioner Matthew Lawrence, Counsel Norbert Fenwick, CPE Consultant Shannon Davis, Outreach Coordinator Barbara Hardy, CPA Office Clerk

OTHERS PRESENT: Tom Hood, MACPA Mary Beth Halpern, MACPA Sandy Stieiwedel, MSA

The February 2, 2010 meeting of the Maryland Board of Public Accountancy was called to order by Chairman H. Terry Hancock at 9:13 AM.

Upon a motion (I) by Mr. Murphy, and seconded by Mr. Speciale, the minutes of the January 5, 2010 meeting were approved, with corrections, unanimously.

Chairman’s Report

Chairman Hancock reviewed the responsibilities of Board members to the citizens of Maryland and the CPA industry. He also complimented the staff on its handling of issues that arose during his first month as chairman.

Executive Director’s Report

Mr. Gring reminded the Board members of their annual responsibility to file financial disclosure reports to the State Ethics Commission by April 30, 2010. The remainder of Mr. Gring’s report was given during old business during the discussion of the project task list. CPA Board Minutes February 2, 2010 Page 2

Education Report

Mr. Speciale reported three (3) regular reciprocal application approvals and one (1) application withdrawal during the period January 5, 2010 through February 2, 2010.

Upon a motion (II) by Ms. Gantnier, and seconded by Mr. Murphy, the Board unanimously approved the Education Report.

Experience Committee Report

Ms. Pierce presented the Experience Committee Report. Twenty-eight (28) Maryland applicants and three (3) reciprocal (4 in 10) applicants were approved during the period January 5, 2010 through February 2, 2010.

Upon a motion (III) by Mr. Speciale, and seconded by Ms. Gantnier, the Board unanimously approved the Experience Committee Report.

Peer Review Committee Report

Ms. Gantnier presented the Peer Review Committee Report. She advised the Board that she concentrated on two issues: The verification of the assertion on the license/permit renewal that the individual/firm has not engaged in peer review mandated services and are not required to undergo a peer review; and the steps that the Board would take to verify the quality of the process of an administering entity.

With regard to verifying a licensee’s/firm’s certification that a peer review was not required, Ms. Gantnier, solicited information from Alicia Foster, former Board chair and past chair of the Board Peer Review Committee, Gary Fruendlich, AICPA’s Peer Review Director, Gaylen Hansen, NASBA Chair. Ms. Foster and Mr. Fruendlich were not aware of an audit instrument to verify licensees/firms certification regarding the need to have a peer review. Mr. Hansen indicated that he was intrigued by the question and was instrumental in having the issue posed in the Spring 2010 Focus Question package to state boards of accountancy. Ms. Gantnier recommended that the Board continue with the current policy of allowing the complaint process to alert the Board to individuals or firms who haven’t had but are required to have a peer review. She suggested that the Board revisit the issue after receiving the results of the Focus Questions Report.

Ms. Gantnier met with the Maryland Association of Certified Public Accountants (MACPA) to review its processes and to discuss the potential for reviewing the peer review process to verify that it was being carried out properly. The following issues were discussed:

 Member firms of the Employee Benefit Plan Audit Quality Center (EBPAQC), Governmental Audit Quality Center (GAQC) or Private Companies Practice Section (PCPS) have their peer reviews performed under the AICPA Peer Review Program administered by MACPA or the Center for Public Company Audit Firms Peer Review Program (CPCAF PRP) which is administered by AICPA. The vast majority of firms in the Center for Audit Quality (CAQ) have their review performed under the CPCAF PRP Standards. All of these peer reviews are subject to AICPA oversight.  Firms that are not enrolled in any of the above, but are members of the AICPA, are enrolled in AICPA’s Peer Review Program (PRP) which is administered by the

CPA Board Minutes February 2, 2010 Page 3

MACPA (or any of the other AICPA approved administering entities). These peer reviews are subject to AICPA oversight.

 Firms that are not enrolled in AICPA’s PRP or CPCAF peer review program may enroll in MACPA’s Peer Review Program. These are the peer reviews that currently are administered by the MACPA, but for which there is no oversight.

Ms. Gantnier also made the following recommendations:

1. The Board should evaluate peer reviews performed by MACPA for which there is no oversight.

2. The Board should obtain a copy of the various procedure manuals and checklists used by the MACPA in order to review them for the Board’s understanding and to verify that those procedures are in fact the procedures being followed.

3. The Board should establish an “at least once every three years schedule” to evaluate peer reviews conducted by MACPA or other Board-approved administrative entities.

4. The Board staff should enhance outreach to licensees and firms concerning peer review and the reporting requirements for licensure.

Upon a motion (IV) by Mr. Speciale, and seconded by Ms. Pierce, the Board unanimously approved the Peer Review Committee Report.

Old Business

Mr. Gring continued his report under the Project Task List update. He advised that the SPRINTS of the Board’s 120/150 and Disciplinary Authority legislative proposals have been reviewed and approved. The disciplinary authority bill has been introduced as HB407. A hearing has not been set as of this date. The 120/150 legislation is expected to be introduced within another week.

Mr. Gring advised the Board that it needs to focus on the Group I, II and III requirements for eligibility for the CPA Exam, contingent upon the passage of the 120/150 legislation. If modification to the requirements under the COMAR regulations are necessary, the Board must be in a position to propose regulatory amendment by the May 4, 2010 meeting to insure implementation to coincide with the effect date of the legislation.

Mr. Gring reported that the proposed regulations concerning increasing from 40 to 45 the number of continuing professional education (CPE) hours for teaching, requiring 80 hours of CPE for first time applicants from Maryland who wait more than four years to apply for a license, and establishing a $240 reinstatement fee for expired firm licenses are scheduled to be published in the February 12, 2010 Maryland Register. The Board can take final action on these regulations at the April 6, 2010 business meeting, with an effective date of May 3, 2010. New Business

The Board discussed with Bert Fenwick the process by which to conduct the July 1 through December 31, 2009 CPE audit. Mr. Fenwick requested guidance on the standards to be

CPA Board Minutes February 2, 2010 Page 4 applied to the audit. This question arose due to the October 1, 2009 effective date of legislation that now permits an unlimited earning of self study CPE courses. The Board advised Mr. Fenwick that licensees who renewed their license up to September 30, 2009 were to be evaluated pursuant to the old provision of the law. Those licensees renewing October 1, 2009 and after were to be evaluated under the new provisions of the law.

Mr. Hancock reminded the Board members to review the NASBA focus questions and to provide feedback to him and Mr. Gring as soon as possible.

At 10:45 AM, the meeting adjourned in order to conduct a hearing in LD10-0002. The meeting resumed at 11:37 AM.

Executive Session

The Board, upon a motion (V) by Mr. Murphy, and seconded by Ms. Gantnier, went into Executive Session at 9:46 AM 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 its public meeting at 12:20 PM, upon a motion (VI) by Mr. Murphy, and seconded by Mr. Speciale.

Complaint Committee Report

Mr. Murphy reported the Board received eight (8) complaints during the period January 5, 2010 and February 2, 2010. During this period nine (9) complaints were closed: CPAS 07- 0019, CPAS 08-0026, CPAS 08-0050, CPAS 09-0041, CPAS 09-0054, CPAS 10-0003, CPAS 10-0028, CPAS 10-0029, and CPAS 10-0035

Upon a motion (VII) by Mr. Speciale, and seconded by Ms. Pierce, the Board approved the Complaint Committee Report.

Upon a motion (VIII) by Mr. Murphy, and seconded by Ms. Pierce, Ms. Root was confirmed as a member of the Complaint Committee.

Upon a motion (IX) by Mr. Speciale, and seconded by Ms. Root, the Board adjourned the meeting at 12:25 PM.

NEXT MEETING

Tuesday, March 2, 2010, 500 North Calvert Street, Third Floor, 9:00 AM

__ X___ With corrections ______Without corrections

______Chairman Date