How to satisfy the new CPE requirements; CPAs have many choices for enhancing their expertise.

HOW TO SATISFY THE NEW CPE REQUIREMENTS

CPAs have many choices for enhancing their expertise.

The members of the American Institute of CPAs are a diverse group with widely differing continuing professional education needs. Today's CPAs are involved in more than just accounting, auditing and tax. They are chief executive officers of corporations, government policy makers, university deans and leaders in many other areas.

When AICPA members overwhelmingly passed the Plan to Restructure Professional Standards, they signified that membership meant making a substantial commitment to professional quality and competence. Under the new standards, as of January 1, 1990, all members of the AICPA, whether in public practice, industry, government or education, must complete CPE. However, by allowing a wide latitude in continuing education choices, the AICPA has made it easy for members to select courses of study that will enhance their professional competence and keep them in the forefront of their fields.

The AICPA policies for the CPE requirements are being sent to members with this issue of the Journal. This article offers examples of how members in different circumstances can satisfy the requirements and explains how to coordinate state and AICPA standards.

WHAT WILL QUALIFY?

Acceptable CPE must meet two requirements:

* It must enhance the individual's professional competence.

* It must be a formal program of learning as described in the AICPA Statement on Standards for Formal Group and Formal Self-Study Programs.

ENHANCING PROFESSIONAL COMPETENCE

Consider the example of John, who, as an AICPA member not in public practice, must complete 60 hours of CPE during the first three-year reporting period, beginning with the 1990 calendar year, and 90 hours every three years thereafter. He is the manager of forecasts and projections for the Seers Corporation and, as such, must be proficient in a number of areas. He must, of course, keep abreast of the latest Financial Accounting Standards Board and Securities and Exchange Commission developments, so he plans to take annual accounting and auditing update courses. But John has other goals at Seers. First, he wants to automate certain functions to increase productivity and efficiency in his department. As a result, he'll need courses in advanced spreadsheet applications and quantitative methods. He also wants to take courses in management to help him keep his staff motivated and challenged.

Courses in all of these areas would increase John's professional competence and would thus be acceptable CPE. The AICPA recognizes that members may need education in numerous areas, so members' choices include but are not restricted to accounting, auditing, taxation, advisory services, communication, ethics, quantitative methods, behavioral sciences, statistics, management and various other subjects that are relevant to specific jobs.

A FORMAL PROGRAM OF LEARNING

The definition of formal programs of learning in the AICPA standards encompasses a wide variety of instruction methods. John's options for CPE programs include but are not limited to

* Attending a conference sponsored by a local university.

* Taking a seminar offered by the state CPA society.

* Completing a self-study program.

* Taking an in-house course through his company.

University and graduate study also may qualify for CPE credit. Paul, a CPA at a small public accounting firm, has decided to go back to school at night to get his MBA. The master's program will qualify for CPE credit because Paul has chosen courses that add to his knowledge and experience. Therefore, he will receive 15 hours of CPE credit for each qualifying semester hour. A three-credit semester course will qualify for 45 CPE credits.

Serving as an instructor or discussion leader of a formal CPE program that increases the instructor's professional competence also qualifies for CPE credit. For example, Linda is a professor at a local university. This year, she taught a program on FASB Statement no. 96, Accounting for Income Taxes, for the first time. Linda did a lot of research and preparation in order to teach this new topic, and this effort earns her CPE credit. However, Linda can't claim any CPE credit for the introductory accounting course she's been teaching for the past five years, since repetitious presentations don't require significant additional study or research and therefore don't serve to enhance the instructor's professional competence.

Linda's credits for serving as an instructor can't exceed 50% of her total CPE for the three-year period. She could earn her remaining CPE credits at an accounting educators' conference, which she attends every year, or at a one-day course on instructional design.

WHAT WILL NOT QUALIFY?

Programs qualify because they enhance professional competence and meet the definition of a formal program of learning in the AICPA standards. Generally, programs that fail to satisfy these two requirements won't qualify. For example, Ringo was recently hired by the Yellow Submarine Co. and received a lot of on-the-job training. This enhanced his professional competence but is not a formal program of learning as defined by the AICPA standards, so Ringo can't count it for CPE credit.

Similarly, Ringo wouldn't receive CPE credit for a basic cost accounting course at a local university if he has worked for a number of years as a cost accountant and is already very familiar with the subject--this formal program of learning won't enhance his professional competence. Very basic or elementary courses in subjects in which the CPA has already achieved competence ordinarily won't qualify for CPE credits.

COORDINATING WITH STATE REQUIREMENTS

The new CPE requirement is for AICPA membership only and is distinct from CPE requirements set by state boards or state societies. Members should remember that while the AICPA is accepting a very wide latitude of subject areas, many of these areas may not be acceptable for their state requirements. Each state licensing authority or state society has unique CPE requirements that may differ widely from the Institute's. All members should consult their state boards of accountancy or societies to ensure compliance.

The AICPA recognized that many members will have to comply with two sets of requirements, so it created two provisions to avoid confusion and duplicate effort. The first involves reporting-period measurement. While the AICPA uses a calendar year for reporting, many states use different periods. For example, Yoko is a manager with a large national accounting firm and is licensed by her state board. Her state requires 120 hours of CPE for the three-year reporting period from September 1, 1990, to August 31, 1993. Since these reporting years differ from the Institute's, Yoko wonders if she will have to keep separate records of CPE for the AICPA and the state.

The answer is no. Under the implementing resolutions of the AICPA bylaws, a member in public practice who complies with a state licensing or state society membership CPE requirement, regardless of whether that requirement is for a calendar year, is in compliance if that state requirement is for an average of at least 40 hours per year. Since that is the case in Yoko's state, she can use her state board's August 31 reporting yearend. She complies with the AICPA's requirement as long as she meets its minimum of 20 hours each year.

There is a similar provision for members not in public practice who must comply with state CPE requirements. For example, Barbara is a controller of a large advertising firm. Her state board requires that members not in public practice complete 40 hours of CPE over the two-year period from April 1, 1990, to March 31, 1992. Since her state board requirement is for an average of 20 hours per year, which is the same as the AICPA CPE requirement during the 1990-1992 transition period, Barbara can use her state's March 31 reporting yearend and still be in compliance with the AICPA requirement as long as she completes a minimum of 10 hours each year.

The AICPA also tried to avoid duplication in reporting between state and AICPA requirements. Many members submit detailed reports to their states, but the Institute doesn't require these. AICPA members will indicate compliance with the CPE requirements simply by checking off the appropriate section on the annual dues statement. The first check-off will be on the 1991 dues statement, which confirms a member's compliance with the CPE requirements for the 1990 reporting year.

AUDITS

Even though members needn't give detailed annual reports to the AICPA, they should keep appropriate documentation because the AICPA will conduct audits of compliance with the new CPE requirements. Audited members will be asked to document the sponsor, title and description of the course and the date, location and number of CPE contact hours for each program completed. Members can keep track of hours using the AICPA reporting form included with the policies or their state board or society forms, if the latter forms include all appropriate documentation.

In documenting CPE, members should keep in mind that credit is measured in 50-minute contact hours. For group study programs, credit should be claimed only for the time a program is actually attended. CPE credit for self-study programs is recommended by the sponsor and must be documented by a certificate or other evidence of completion.

EXCEPTIONS

The wide choice of acceptable courses and sources of instruction should enable most members, even those in foreign countries, to fulfill their CPE requirements. For example, George, who works for Equatorial, Inc., in Saudi Arabia, can qualify with locally sponsored education, self-study programs or in-house training.

However, the AICPA recognizes that some members won't be able to satisfy the requirements. If a member cannot fulfill them because of health, military service, foreign residency or other reasons, he or she may submit a written request for a waiver to the AICPA membership department. Requests must include specific information, such as the nature of the hardship and why it prevents the member from fulfilling the requirements.

Retired members will receive an automatic exception by indicating their status on the dues statement and need not submit a written request for a waiver.

NUMEROUS BENEFITS

The new CPE requirements offer a number of benefits. They will help CPAs by enhancing their professional competence and ensuring they are knowledgeable and valuable members of their profession.

CPE also benefits employers because enhanced knowledge means better employees. Keeping abreast of developments in today's world of complex regulations and rapidly expanding technology is critical.

Finally, CPE benefits both the accounting profession and the public. All members of the AICPA will enjoy the respect for a profession that demands continuing enhanced professional competence of its members. Adherence to these requirements sends an important message to the public about CPAs' commitment to the quality of the profession.

ELLEN DALEY, CPA, is assistant director of people planning and development at CIGNA, Bloomfield, Connecticut. She was a member of the American Institute of CPAs task force on continuing professional education requirements for members in industry, government and education. LINDA LACH, CPA, is a project manager in the AICPA CPE division and was a staff aide for the CPE task force.