shutterstock 1163367484Passing the CPA exam is challenging enough. You need to pass 4 sections over several months, only about 50% of takers pass it, and you can spend up to $3,000 just to study and take it! Would the American Institute of Certified Public Accountants (AICPA) or the Financial Accounting Standards Board (FASB) require you to take it more than once? Thankfully, each state determines the standards required to maintain one’s license. And as of 2020, no state requires you to retake the CPA exam just to maintain your certification. However, nearly every state requires some form of continued education.

Continuing Professional Education (CPE) Courses

While the state may not ask you to retake the CPA exam, just about every state demands continued education. From a pragmatic perspective, this is so that people can maintain their knowledge of the Generally Accepted Accounting Principles (GAAP). From a legal perspective, this is a way to help prevent fraud, whether from ignorance, negligence, or intent.

So, what are these requirements? How does each state differ? Pennsylvania requires 80 hours of continued education between each reporting period. Furthermore, they require 20 hours per year of continued education. Alabama only requires 40 hours of continued education. Even states like Wisconsin require none! States can differ in their demands in 5 ways:

  • Total number of CPE hours required
  • Annual renewal date (December 31st on odd-numbered years, for example)
  • Length of the reporting period (report CPE every 4 four years, for example)
  • Particular CPE courses and hours needed (4 hours in ethics, for example)
  • Hours of self-study, published materials, and class time

It’s vital to know your state’s requirements. Furthermore, if you move, make sure you know your new state’s requirements as well.

Where do you go for CPE courses? Where can you find acceptable published materials? How can you find out your state’s requirements? Thankfully the National Association of State Boards of Accountancy (NASBA) makes it easy. You can find everything you need to know here.

Retaking the CPA Exam

You might also wonder, “If I forget to keep up with CPE, do I have to retake the CPA exam?” Again, thankfully other measures are taken before doing the CPA exam again becomes necessary. And again, each state differs. In Pennsylvania, for example, you incur certain fines depending on how many hours of CPE you fall short during the reporting period. It works as follows:

  • Short 1-20 hours = $300 fine
  • Short 21-40 hours = $600 fine
  • Short 41-60 hours = $800 fine
  • Short 61-80 hours = $1,000 fine

If the problem continues, the State Board of Accountancy in Pennsylvania will review your case. They might decide to revoke your license indefinitely or require you to take the CPA exam again.

Other states work a little differently. In Florida, if you fail to maintain your CPE, your license will be revoked. Then, in addition to providing evidence of completing the CPE remaining, you must pay an application fee, current licensure fee, and delinquent fee totaling $250. It’s important to know your states’ standards and penalties.

Auditing CPE Hours

You might ask, “How do they enforce these standards? How do they know whether or not I’ve legitimately completed the course work?” Many CPE courses are online now. So how do they know you’re paying attention in a live online class and not watching TV? Each state conducts random audits of their CPAs. The audit aims to ensure that everyone completes the required CPE hours. If they notice a discrepancy or inconsistency, then you can bet they’ll pay closer attention. If they discover that someone cheated or didn’t take the class seriously, they’ll be guilty of fraud and their license will be revoked.

CPE fraud can take many forms. Author Greg Kyte at goingconcern.com wrote an article a few years ago documenting some anecdotal examples of CPE fraud. He writes in one place, “For the past three reporting cycles, a former-KPMG CPA has completed 80 hours of CPE during the week between Christmas and New Year. He orders self-study courses, goes directly to the exam, and uses the index to find answers to the questions he doesn’t know.” He goes on to cite behavioral economist, Dan Ariely, who once said, “[People] cheat only to the extent that they can continue to feel good about themselves.” So as long as you can rationalize the cheating to yourself, it will seem acceptable to you. However, that won’t hold up in court. And that won’t hold up to the state board!

CPA Exam Cert Expires

Finally, when does your certification expire? You’ve completed your mandated CPE honestly. You’ve crossed your t’s and dotted your i’s. So do you need to retake the exam after 10 years, for example? Or 20? As of now, no state has such a requirement. And, like we mentioned above, most states mandate a particular number of hours within a certain window of time so that your certification won’t expire. For some, that’s 40 hours in 4 years. For others, that’s 20 every year with a total of 80 every renewal period. For still others, as long as you’re still practicing accounting, you’re good. If you need precise information for your state, check out the link to the NASBA we provided above.

DQ Staff

February 2020

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