Publications
Biennial Report
The Virginia Board of Accountancy Biennial Report
Fiscal
Years 2007 - 2008
The Board of Accountancy’s Board membership consists of seven members: one public member who may be an accountant but does not hold a CPA certificate; one educator in the field of accounting; and five certified public accountants of which four have been actively engaged in the practice of public accounting for at least three years prior to their appointment to the Board and one who may be a CPA not engaged in the practice of public accounting at the time of appointment but who has at least three years of experience in the accounting field prior to appointment. The Governor appoints each member to a term of four years and may not serve for more than two consecutive terms.
As noted in our mission statement on the first page of this document, the Board is committed to serving all citizens of the Commonwealth by ensuring the continuing qualifications of all individuals and firms holding themselves out to the public to be Certified Public Accountants. And while protecting the public, the Board also ensures that established standards are necessary and equally applied to all individuals and firms regulated by the Board.
Financial Management
As a non-general fund agency, VBOA is supported by assessments on licensed practitioners, and receives no income from tax revenues. State law requires the agency to adjust fees so that revenues are sufficient to cover expenses.
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|
|---|---|---|
| Final Appropriations | $1,028,439 | $1,157,506 |
| Revenues | $789,120 | $802,628 |
| Expenditures | $911,371 | $1,141,304 |
| Cash Balances | $308,305 | $96,023 |
Licensing
The primary regulatory function of the Board of Accountancy is to license Certified Public Accountants (CPA) and CPA firms in the Commonwealth of Virginia. The initial application process involves determining whether each applicant for a CPA certificate meets the education, examination and experience requirements in strict compliance with the Code of Virginia and the Board’s regulations.
During this biennial report period, the Board processed the following types of licenses:
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||
|---|---|---|---|---|
| Original Applications | ||||
| Online | 1,142 | 1,106 | ||
| 17 | 9 | |||
| Endorsement | ||||
| Online | 317 | 316 | ||
| 5 | 3 | |||
| Reinstatement | ||||
| Online | 220 | 199 | ||
| 9 | 2 | |||
| Total Individuals | 1,710 | 1,635 | ||
| Firms | ||||
| Online | 72 | 74 | ||
| 8 | 4 | |||
| Total Firms | 80 | 78 |
The Board staff also processed a many renewal applications (from established individual CPAs and CPA firms) during this timeframe.
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||
|---|---|---|---|---|
| Renewal Applications | ||||
| Individuals | 19,213 | 18,847 | ||
| Firms | 1,107 | 932 | ||
| Total Individuals | 20,320 | 19,779 |
The grand total of all licenses processed during this biennium was as follows:
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||
|---|---|---|---|---|
| 22,110 | 21,492 |
Continued Professional Education (CPE)
Essential to the renewal application process is the determination of the continued competence of a CPA certificate holder and a CPA firm permit holder. For a CPA certificate holder, maintenance of professional competence is measured by a requirement to meet continuing professional education (CPE) standards; and for a CPA firm permit holder, this is determined through compliance with peer review requirements. These processes are necessary in order to protect the public.
Beginning in FY2003, the Board began a random audit of licensed CPAs to review documentation required to be maintained by the CPA to verify compliance with the Board’s requirements for continuing professional education (CPE).
In addition, starting in FY2007, the Board also developed an audit procedure for use by CPA firms performing peer reviews. Since 2007 the Board staff has completed audit reviews for 100% of the firms practicing in the Commonwealth of Virginia. A periodic review process has been implemented to review a percentage of firms annually to ensure continued compliance.
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||||
|---|---|---|---|---|---|---|
| CPE | ||||||
| In Compliance | 450 | 87.9% | 697 | 98.4% | ||
| Not in Compliance | 62 | 12.1% | 11 | 1.6% | ||
| Total Reviewed | 512 | 100.0% | 708 | 100.0% | ||
| Peer Review | ||||||
| In Compliance | 1,163 | 90.7% | 595 | 93.2% | ||
| Not in Compliance | 119 | 9.3% | 43 | 6.8% | ||
| Total Reviewed | 1,282 | 100.0% | 638 | 100.0% | ||
As the percentages above suggest, most individual and firm reviews reflect the success of the continuing professional education program. However, in those instances where inadequate responses were received to VBOA requests for verification of required CPE hours, and/or to deficiencies identified during peer reviews, follow up enforcement action was initiated to protect the public from individuals and firms who fail to maintain required continuing professional education.
Enforcement
In addition to its internal enforcement agency staff, the Board has an Enforcement Committee comprised of two Board members. The mandate of this Committee is to review information compiled by the Board’s investigative staff, and to determine the substance of violations of the statutes and regulations governing the practice of public accounting by CPAs and CPA firms. After careful deliberation by the Committee, it recommends appropriate action to the full Board for final disposition.
The Committee strives to enhance the efficiency and effectiveness of resolving complaints by using consent agreements, and by utilizing mediation as a means of dispute resolution in certain cases.
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||
|---|---|---|---|---|
| New Complaints Received | 30 | 37 | ||
| Unlicensed Activity | 20 | 18 | ||
| PCAOB Matters | 0 | 1 | ||
| Other Matters | 11 | 22 | ||
| Total New Compaints | 61 | 78 | ||
| Fines Levied | $73,000 | $165.000 | ||
| Fines Collected | $19,500 | $137,620 |
All monies collected from enforcement activities are required to be deposited into the Literary Fund and used to support Commonwealth of Virginia educational initiatives.
Exam Function Transfer
In August, 2006, the Board decided to terminate its contract with an outside vendor providing Uniform CPA Examination administration and transfer the CPA exam administration process in house as a primary business function. This resulted in a 66% cost savings to Virginia candidates taking the exam, and improved customer service.
| Fiscal Year 07 7/1/2006 - 6/30/2007 |
Fiscal Year 08 7/1/2007 - 6/30/2008 |
|||
|---|---|---|---|---|
| Initial Exam Applications | 1,217 | 2,095 | ||
| Re-exam Applications | 6,171 | 9,272 | ||
| Total Applications | 7,388 | 11,367 |
Real Estate Initiative
In August 2007, the Board participated in the Department of General Services’ Real Estate Initiative. This initiative relocated several independent state agencies operating at various sites in the city of Richmond into one centralized office building location at 9960 Mayland Drive.In addition to savings on rent, consolidated mail services, conference rooms, security, and a secured information technology data center are shared by all tenants, resulting in additional savings to the Commonwealth.
Information Technology
The Board of Accountancy serves 99% of its clientele via online access and transactions. However, the custom built, in-house, internal application software that supports the mission-critical, licensing, enforcement and financial functions of the agency is old and outdated, and no longer meets the agency’s needs. In response to this need, VBOA identified a licensing application system that supports our business needs, including fully interactive processes for on-line licensure, case management and reporting and also provides better service to our customers. The provider of this application is System’s Automation, and VBOA is now working with them, Virginia Information Technologies Agency (VITA), and Department of Health Professions (DHP) to implement the new system. The implementation is expected to be completed in December, 2008.
Regulatory
During FY2007, the Board embarked on a significant initiative to revise the statues governing the Board. The Board used a “conceptual” approach in this legislative initiative striving to ensure that the finished product would provide a clear, concise, and “evergreen” model for agency use. The legislative proposal became effective on July 1, 2007. The Board continues its efforts to develop regulations, and seeks public comments, so that they may move the proposal through the administrative process.
Internal Control Review
The Board had an internal control review (ARMICS) conducted during this biennium, as required by the Department of Accounts.The review was performed by an external vendor, and identified no material weaknesses in the Board of Accountancy’s financial processes.The result of this was that the agency was not required to file a corrective action plan with the Department of Accounts.
The Board of Accountancy is committed to protecting the public. In the next biennium, the Board intends to continue its improvement efforts through the regulation process, and by ensuring that staff continues to work in a professional manner with all licensed CPAs and CPA firms, and with the public.