Ethics for Vermont CPAs – 4 Hours

This four-hour course meets the four-hour ethics requirement Vermont CPAs must complete each two-year renewal period, and covers the Administrative Rules for the Vermont Board of Public Accountancy in the detail a licensee needs — Part 9 on continuing professional education and Part 10 on professional conduct — together with the definition of unprofessional conduct at 26 V.S.A. Section 76.

Continuing education is treated as a subject in its own right, because Vermont's structure catches people out. The course covers the eighty-hour biennial requirement and the two mandatory components inside it: four hours of ethics and eight hours of accounting and auditing. It covers the reduced requirement after an initial licence period and the position of a licensee whose licence has lapsed; which programs and subject areas qualify and where the burden of proof sits; how credit is computed, including the fifty-minute hour and the treatment of university courses, correspondence and formal individual study, instruction and published work; the five-year record retention rule and what acceptable documentation looks like; and the carry-forward allowance of ten hours — which specifically cannot include the eight accounting and auditing hours or the four ethics hours.

The professional conduct rules follow. Vermont treats independence by reference: a licensee's independence is impaired if they fail to follow the current AICPA Code, PCAOB, Government Accountability Office or SEC standards, whichever applies. The course then works through integrity and objectivity; commissions and referral fees and the disclosures they require; contingent fees; incompatible occupations; peer review, including the thirty-day deadline to notify the Board and provide proof of enrolment after first performing an attest service, the eighteen-month deadline to undergo the review, the twenty-eight-month deadline for the final acceptance letter, and what follows a rating of pass with deficiencies or fail; confidential client information and the five-year retention period for work papers and engagement records; acting through others; advertising, including the six items a licensee must display prominently when offering professional services online — name, firm name and firm registration number, principal place of business, business telephone number, a statement that the individual holds a Vermont licence, and a link to the Office of Professional Regulation; and misleading firm names.

Alongside the Vermont rules, the course covers the AICPA Code of Professional Conduct across all three of its parts — members in public practice, members in business, and other members — including integrity and objectivity, preparing and reporting information, responding to noncompliance with laws and regulations, independence with its network firm and alternative practice structure 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 includes the determining fees and fee dependency interpretations effective January 2025.

The reasoning behind the rules gets equal weight. The course separates morals from ethics and shows where the two diverge, using Prohibition and the Nike contract manufacturing controversy of the 1990s as cases where prevailing moral views pulled ethical standards above what the law required; offers the Publicity Standard and the Person Looking Over Your Shoulder Standard as practical tests; sets out the conceptual framework of threats and safeguards with worked illustrations of each threat category; and examines the motivations that precede most ethical lapses — greed, self-interest, undue influence and familiarity.

Three extended studies of audit failure anchor the discussion of what the public expects of a CPA: Arthur Andersen at Enron, including the mark-to-market accounting and the special purpose entities used to keep debt off the balance sheet; the audit of Bernard Madoff Investment Securities by a sole practitioner working from a small office, who held millions in accounts at the firm he was auditing and issued opinions for seventeen years without performing an audit; and Phar-Mor, where two sets of books and inflated inventory went undetected because the auditors observed only four stores and told the company months in advance which four.

Five Vermont case studies apply the rules directly: a firm that issued a review report while one of its partners served as executor of an estate holding shares in the client; a fee quoted as the greater of a fixed amount or a percentage of a client's tax refund; a tax practitioner with no audit experience proposing to trade and advertise as Audit Experts; a tax practitioner who performed a single compilation as a favour, and discovers what that triggers; and an unpaid auditor holding client-supplied records, which Vermont treats differently from most states.

Learning objectives

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

1. Define ethics from an overall and professional perspective.
2. Define the continuing education requirements for Vermont CPAs.
3. Recognize the ethical standards contained in the Vermont Board of Public Accountancy rules.
4. Recognize the ethical standards contained in the AICPA Code of Professional Conduct.