Ethics for South Carolina CPAs – 2 Hours

South Carolina asks for at least two hours of behavioral or regulatory ethics every year, within a forty-hour annual continuing education requirement. This two-hour course is built to that requirement, and it is structured differently from a conventional ethics course: rather than marching through a code section by section, it is organised as a series of questions a South Carolina licensee actually asks, with the relevant statute and regulation cited in answer to each.

The first half covers licensure and registration. Who may use the CPA credential, and what the Emeritus and Retired designations require — Emeritus for a licensee who performs no compensated accounting work, renewing annually with no fee and no CPE; Retired for a licensee with thirty years of licensure, aged fifty-five in a prior licence year, working no more than twenty hours a week and offering no attest or compilation services, who may meet the CPE requirement with twenty hours annually but must still complete two ethics hours each year. It covers the twelve grounds on which the Board may revoke, suspend, reprimand or limit a licence, and the administrative fine of up to ten thousand dollars per violation; who may perform attest services and the safe-harbour language a non-licensee may use; reciprocity and the practice privilege available to a CPA whose principal place of business is elsewhere; the continuing education rules in detail; the requirements for CPA firms located inside and outside South Carolina; and peer review.

The second half covers the ethical and regulatory requirements themselves. South Carolina Regulation 1-10 requires a licensee to comply with all federal and state laws governing their business and personal affairs and prohibits acts discreditable as defined by the AICPA's ethical standards — so the course works through the AICPA acts discreditable rule in full, including failure to file a personal tax return or pay a tax liability, negligence in preparing financial statements, failure to follow government auditing standards, disclosure of confidential employer information, false or misleading promotion of services, and improper retention of client records. Regulation 1-10 also states plainly that a licensee or firm may not knowingly employ anyone whose licence has been revoked or suspended in any jurisdiction, in any capacity connected with the practice of accounting.

Working papers and client records are covered through the statutory definitions South Carolina uses — client records, CPA-prepared records, CPA work papers and CPA work products are four distinct categories with different rules attaching to each — together with what must be furnished on request, what may be withheld for unpaid fees or incomplete work, and the fee a licensee may charge for retrieval. Confidential client information and its exceptions follow, as do the firm name rules, including the four categories South Carolina treats as misleading and the network firm provision. The course also covers Regulation 1-12, which requires every licensee or firm to designate someone to take responsibility for client files in the event of incapacity, disappearance or death, and sets out what an appointed licensee must do — including publishing notice for thirty days and in a newspaper of general circulation.

Four case studies apply the rules directly: a CPA who reached 1 May without filing her own return or an extension; a departing audit client demanding the firm's working papers to reduce the incoming firm's fee; a sole practitioner with no audit experience proposing to trade as Audit Experts Group; and a firm considering whether a partner's death requires a change of name.

Learning objectives

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

1. Describe the laws contained in Title 40, Chapter 2 of the South Carolina Statutes.
2. Describe the regulations contained in the South Carolina Code of Regulations, Chapter 1, Board of Accountancy.