Ethics for Michigan CPAs – 2 Hours

Michigan is unusual in asking for ethics CPE every year rather than every two or three. A Michigan licensee must complete 40 hours of continuing education in each 1 July to 30 June continuing education period, and two of those hours must be professional ethics. This two-hour course is built for that annual requirement.

Please read this before purchasing. Michigan requires 4 total ethics hours across each two-year cycle, of which one hour must be Michigan State Specific Ethics — a course whose content is created by the Michigan Association of Certified Public Accountants. This course provides two hours of professional ethics and does not cover that one-hour state-specific requirement. Michigan licensees should obtain the state-specific hour from the MICPA.

What the course does cover is the framework a Michigan CPA is actually held to. The Michigan Administrative Code adopts the AICPA Professional Standards, including the Code of Professional Conduct, by reference at R 338.5102, and uses the AICPA independence rules at R 338.5405. So the AICPA Code is not a supplement to Michigan law — it is the substance of it, and the course treats it accordingly, covering all three parts of the Code: members in public practice, members in business, and other members.

Selected Michigan rules are covered directly. R 338.5104 requires documentation of services performed, evidence obtained and conclusions reached to be retained for not less than five years. R 338.5210 and R 338.5211 cover licence renewal, the nonresident licensee who may satisfy Michigan by meeting their home state's requirements, the four-year retention of CPE documentation, and the additional four hours of credit assessed for each month of a deficiency. R 338.5215 sets out in detail what counts as acceptable continuing education and how credit is calculated — including the half-credit and one-fifth-credit increments after the first 50 minutes, the treatment of nano-learning at 0.2 credit with a 100 per cent passing grade required, and the combined 20-hour ceiling on self-study and nano-learning in each period. R 338.5230 covers relicensure after a lapse, and R 338.5255 lists the qualifying subject areas, including the twelve technical ethics topics and the five behavioural ethics topics Michigan recognises.

On conduct, the course covers R 338.5401 on responsibility for supervised persons and the prohibition on having others do indirectly what the licensee could not do directly; R 338.5405 on independence; R 338.5435 on competence; R 338.5460 on contingent fees, including Michigan's definition of tax matters and the rule that an expectation of substantive agency consideration is never reasonable for an original return; R 338.5475 on commissions and referral fees and the distinction Michigan draws between them; and R 338.5465 on discreditable conduct, which lists fifteen specific acts — a notably longer and more prescriptive list than the AICPA equivalent, reaching deceptive representations, failure to perform services on a timely basis, implying abilities not supported by qualifications, retaining a client's original books and records after a demand for their return, and failing to respond within a reasonable time to Board inquiries.

The AICPA material covers the conceptual framework of threats and safeguards, integrity and objectivity, preparing and reporting information, responding to noncompliance with laws and regulations, independence with its network firm, financial interest, loan, lease, litigation, staff augmentation and nonattest services provisions, the general standards, compliance with standards and accounting principles rules, acts discreditable, contingent fees, commissions and referral fees, advertising, confidential client information, and form of organization and name. The independence material is current through the determining fees and fee dependency interpretations effective January 2025, the revised recruiting rules effective January 2026, and the revised simultaneous employment interpretation effective September 2026.

The course opens with the reasoning behind the rules, separating morals from ethics and showing where the two diverge, using Prohibition and the Nike contract manufacturing controversy as cases where prevailing moral views pulled ethical standards above what the law required, and setting out the five core foundations of independence, integrity, objectivity, public interest and due care. Case studies include a president who loads a trailer and parks it in the lot on 31 December to make budget, a friend whose cash restaurant reports a loss and who says the figures are the ones he wants reported, married tax clients going through a divorce, year-end adjustments made with a bank loan covenant in view, and an audit that peer review found deficient in six respects.

Learning objectives

Upon completion of this course, participants will be able to:

1. Define ethics from an overall and professional perspective.
2. Recognize the general rules governing accounting from the Michigan Administrative Code.
3. Describe the ethical standards contained in the AICPA Code of Professional Conduct.