Required ethics CPE: What does it mean for you?

FAQs about the requirement

Maryland's State Board of Public Accountancy has enacted a new continuing professional education mandate that requires Maryland CPAs to devote at least four hours of CPE every two years to ethics training.

When the new ethics CPE requirement was proposed in early 2005, the MACPA sent a letter on its members' behalf to the State Board seeking clarification on a number of issues.

To our knowledge, the following information represents the State Board's position on these issues.

Effective date

The ethics CPE requirement will take effect on Oct. 1, 2006. That means four hours of ethics CPE will be required for license renewals beginning Oct. 1, 2006.

Inactive CPAs

It appears the ethics CPE requirement does not apply to renewals of inactive licenses. However, if a holder of an inactive license were to reactivate the license, the four hours of ethics training would be required as part of the continuing education required by law.

Initial licensure

The ethics CPE requirement for new licensees would begin in the first two-year license term after initial renewal as part of the 80 hours of acceptable continuing education.

University / college credit

Current regulations state that college and university courses can count toward a CPA's continuing education requirement at a rate of 15 hours per semester-hour credit and 10 hours per quarter-hour credit — that is, as long as the course "contributes directly to the professional competence" of a CPA.

Additionally, Maryland accounting students must successfully complete three semester hours of business ethics.

These facts raise two points in regard to the new ethics CPE requirement:

• A CPA who was licensed prior to the three-semester-hours ethics requirement may be able to apply a university or college ethics course taken subsequent to licensure toward the new ethics CPE requirement if he or she did not take the course prior to licensure.
• The self-study course "Professional Ethics: The AICPA's Comprehensive Course," which is required for licensure, may only be applied toward the fulfillment of the ethics CPE requirement if the CPA takes the course after licensure and the course contains new material to the extent that it contributes to the competence of the CPA after licensure.

Self-study / teaching / publishing

Existing rules regarding qualifying CPE apply to the new ethics requirement.

• For teachers, lecturers or discussion leaders: Qualifying CPE credit will be included to the extent that it contributes to the licensee's professional competence. Repetitious presentation will be included only once. Hours allowable in the capacity of teacher, lecturer or discussion leader may not exceed 40 hours of the minimum requirements and with no carry-over provision for excess hours.
• For interactive and non-interactive self-study: Such programs will qualify only if it is a formal program of learning that contributes directly to the professional competence of a CPA after he or she has been licensed. Credit for a combination of interactive self-study and non-interactive self-study programs is limited to a total of 60 hours in any license term, of which only 40 hours may be earned through non-interactive self-study programs, with no carry-over provision for excess hours.

Course content / providers

• The Board of Accountancy has not developed specific requirements (for example, business ethics or codes of professional conduct) for ethics course content.
• It is not the policy of the Board to pre-approve courses for continuing education credit.
• Courses that contain ethics as only part of the program may not be sufficient to satisfy the ethics CPE requirement unless it can be demonstrated that the required hours of CPE are dedicated to ethics education.

Out-of-state education

Ethics training received in another state could satisfy Maryland's requirement if the out-of-state training covers applicable ethics standards, and not just state-specific content.

Documentation

CPAs can substantiate the completion of the ethics requirement by following the documentation requirements for the current 80 hours of CPE.