Can Managers Rely On The Work Of CPAs?

Abstract

Managers often rely on the work of independent CPAs as they make critical business decisions. To have confidence in the workproducts of CPAs, managers should be familiar with the regulation of the profession. Besides entrance requirements (examination and experience) and continuing professional education classes, CPAs are subject to disciplinary actions. The process of taking disciplinary process for CPAs in one US jurisdiction was first studied and documented. Then, ten years of disciplinary actions taken in the jurisdiction were researched. The results show that the State Board of Accountancy approaches a complaint against a CPA seriously. The Board investigates each individual complaint and molds the resulting disciplinary action to the specific case. In 99% of the cases, the CPA’s license was revoked, suspended, placed on probation, or censured. In the remaining cases, conditions to be complied with were handed down. Several CPAs were subject to more than one impact to the license. While the cases spanned a variety of issues, for 88% of the cases, the focus was the CPA’s failure to renew the license. In the small percentage of cases addressing more serious issues, the issue was peer review, a conviction/guilty plea/civil judgment, or some other violation of the state’s accountancy law. Most of the actions, 98%, were against individual CPAs, rather than CPA firms. The findings provide assurance to managers that the workproducts of CPAs can be relied upon in managers’ critical decision-making.