Board of Public Accountancy s5

STATE OF MARYLAND BOARD OF PUBLIC ACCOUNTANCY MINUTES

DATE: November 5, 2010

LOCATION: 500 North Calvert Street Baltimore, Maryland 21202 Third Floor Conference Room MEMBERS IN ATTENDANCE: Tim Murphy Elizabeth S. Gantnier Clifton B. Jeter Raymond C. Speciale Marjorie Root

MEMBERS ABSENT: H. Terry Hancock Ella Pierce

DLLR OFFICIALS/STAFF: Dennis L. Gring, Executive Director Linda L. Rhew, Administrative Officer Matthew Lawrence, Counsel Norbert Fenwick, CPE Consultant

OTHERS PRESENT: Tom Hood, MACPA Mary Beth Halpren MACPA Shirley Buchanan, MSA Bobby Buchanan, MSA Richard Messenger, MSA

The November 5, 2010 meeting of the Maryland Board of Public Accountancy was called to order by Acting Chairman Tim Murphy at 9:04 AM.

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

Chairman’s Report

Mr. Murphy introduced Mr. Clifton B. Jeter as the newest industry member of the Board. The Board members welcomed Mr. Jeter.

Mr. Murphy reported on the Annual Meeting of the National Association of State Boards of Accountancy at which he and Ms. Gantnier attended that was held in San Antonio TX, on October 24-27, 2010. The highlight of the meeting was the discussion of International Financial Reporting Standards (IFRS) which is to be a single set of accounting standards used worldwide to provide high-quality, transparent, and comparable information for investors and other consumers of financial information. Other issues discussed at the meeting included an update on the Uniform CPA Examination, the need for high ethical standards for the profession, the efforts of the Internal Revenue Service to register tax preparers, and the search for a new NASBA Chief operating officer. Mr. Murphy advised the Board of the sentiments of most of the other representatives of state Boards that the new CPA Board Minutes November 5, 2010 Page 2

NASBA CEO is a certified public accountant. The Board again expressed its position that the new NASBA CEO be a CPA.

Mr. Murphy asked Mr. Lawrence whether the members of the Board were legally protected for their actions as Board members. The question was raised because members of the South Carolina Board of Accountancy reported that they were being sued. Mr. Lawrence assured the members of the Board that they are generally immune from suit for action in the scope of their duties as board members.

Executive Director’s Report

CPE Audits

Mr. Fenwick, the Board’s continuing professional education auditor, is finishing up the final paper CPE audit for the period of July 1, 2009 –April 3, 2010. Automated audits have been completed for the months of April, May and June 2010. To date, 14 CPE audit failures have been reported to the Complaint Committee. Ten consent Orders have been proposed.

January Meeting

Mr. Gring reported that due to conflicts with other Board and Commission meetings, the January meeting of the Board is now scheduled for Tuesday, January 4, 2011, the traditional day for Board meetings.

Education Report

Mr. Speciale reported four transfer of grades and two regular reciprocal application (1) approvals. There was one (1) transfer of grade application denial as follows:

File TGD 1110-01, the applicant was denied licensure as the result of lacking two (2), three semester credit courses in federal taxation and ethics.

There were two (2) regular reciprocal application denials as follows:

File RD 1110-01, the applicant was denied licensure as the result of lacking two (2), three semester credit courses in auditing and ethics; and five semester hours in other accounting courses. The applicant only documented the completion of 143.5 hours of the 150 semester hour requirement for licensure.

File RD 1110-021, the applicant was denied licensure as the result of lacking one (1), three semester credit course in ethics.

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

Experience Committee Report Ms. Gantnier presented the Experience Committee Report. Forty-Four (44) Maryland applicants and 5 reciprocal (4 in 10) applicants were approved during the period October 5, 2010 through November 5, 2010. There were no denials.

CPA Board Minutes November 5, 2010 Page 3

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

Firm Permit Committee Report

Ms. Root presented the firm permit committee report. There were three (3) Limited Liability Corporation permit approvals, and three Corporate permit approvals, during the period October 5, 2010 through November 5, 2010.

Upon a motion (IV) by Ms. Gantnier, and seconded by Mr. Speciale, the Board unanimously approved the Firm Permit Report.

Peer Review Committee Report

Ms. Gantnier presented the Peer Review Committee Report. She advised that the PROC met early in November and finalized the agreement between the State Board and the Administering Entity – it is ready for signatures. The Committee is eager to continue the process of the Board hiring a part time person to assist the PROC. Since Jacob Cohen is retiring in December 2010, the Committee is also looking for suggestions of a replacement for him. The PROC does not expect to have significant activity once busy season gets underway.

Ms. Gantnier reported that she and Mr. Speciale met with representatives of Maryland Society of Accountants (MSA) and the Maryland Association of Certified Public Accountants (MACPA) after the October 5, 2010 meeting to discuss confusion that exists regarding the requirements for peer review. This confusion has been brought on by changes in the professional literature, the new peer review requirements and the mobility legislation.

In the opinion of each party, in order to protect the users of financial statements and prevent further confusion, the attendees at the meeting unanimously decided the following: Attest services should include audits, reviews and compilations and non-permitted firms should not perform audits or reviews.

Non-permitted firms would be allowed to perform compilations only if they include “safe harbor language” in the accountant’s report. Such language should incorporate two things: the elimination of any references in the report to the AICPA’s SSARS; and the inclusion of language indicating that the firm has not undergone, nor is required to undergo, peer review.

The Board concluded that changes to the law are needed to clarify these items and to protect the interests of the users of financial statements. At this time, the Board encourages the MSA and MACPA to continue their collaborative efforts to assist the Board in fashioning an appropriate solution. Upon a motion (V) by Mr. Speciale, and seconded by Ms. Root, the Board unanimously approved the Peer Review Report.

Old Business

Mr. Gring reviewed the project task list.

Upon a motion (VI) by Ms. Gantnier, and seconded by Mr. Speciale, The Board recommended that the Board file an application for membership in Federal Association of Regulatory Boards (FARB).

New Business

Upon a motion (VII) by Ms. Gantnier, and seconded by Ms. Root, the Board approved the extension of peer review for Kenneth G. Menzies, Jr. PA. until January 31, 2011.

Executive Session

The Board, upon a motion (VIII) by Ms. Gantnier, and seconded by Ms. Root, went into Executive Session at 10:20 PM 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 10:48 PM, upon a motion (IX) by Ms. Speciale and seconded by Mr. Jeter.

Complaint Committee Report

Mr. Murphy reported that the Board received nine (9) complaints during the period October 5, 2010 through November 5, 2010. During this period nine (9) complaints were closed: CPAS 08-0054, CPAS 11-0008, CPAS 11-0012, CPAS 11-0013, CPAS 11-0015, CPAS 11-0017, CPAS 11-0018, CPAS 11-0020, and CPAS 11-0021. Eight of the nine complaints closed involved licensees who failed the CPE audit who accepted disciplinary action through a consent agreement. The primary audit failure in these cases involved the lack of completion of CPE in ethics.

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

Upon a motion (XI) by Ms. Gantnier, and seconded by Mr. Jeter, the Board approved an original license for an applicant who answered “yes” to a conduct question on the application (ref EX-A-1110).

Upon a motion (XII) by Ms. Root, and seconded by Mr. Jeter, the Board approved an original license for an applicant who answered “yes” to a conduct question on the application (ref EX- B-1110). Upon a motion (XIII) by Mr. Jeter, and seconded by Ms. Gantnier, the Board approved an original license for an applicant who answered “yes” to a conduct question on the application (ref EX-C-1110).

Upon a motion (XIV) by Mr. Speciale, and seconded by Ms. Root, the Board denied the written appeal of a CPA Examination applicant who could not provide a education credentials evaluation (ref EX-D-1110).

Upon a motion (XV) by Ms. Root, and seconded by Mr. Jeter, the Board approved an original license for an applicant who answered “yes” to a conduct question on the application (ref EX- E-1110).

Upon a motion (XVI) by Ms. Root, and seconded by Mr. Speciale, the meeting adjourned at 10:54 AM.

NEXT MEETING

Tuesday, December 7, 2010, 500 North Calvert Street, Third Floor, 9:00 AM

__ ___ With corrections ______Without corrections

______Chairman Date