The compliance desk audit cycle normally begins in April but was delayed, until September 1, 2020, due to the pandemic. In recent years, NASBA’s National Registry team has noticed an alarming trend of the increasing number of desk audit failures. In fact, there has been more than 60 percent audit failures in the sample selected for the 2019 desk audit cycle.

During this cycle, audit notices will be sent out on the first business day of the months of September through December 2020. The compliance desk audit starts with an email to the main contact for the account, notifying this person that the account has been selected for audit. The main contact will be asked to acknowledge the notice and attach the program list from the most recent renewal period. These renewal period dates will be outlined in the notice. Once the acknowledgment and program list have been submitted, NASBA will select one program for each approved delivery method.

The main contact will receive an email with the names of the programs selected for each delivery method and the link to the audit form. The audit form will provide details and instructions on how to submit the requested documentation to the National Registry team for review.

The requested timeframe to acknowledge and submit audit documentation is relatively short because this documentation should be on file, as required by Standard No. 24. However, if additional time is needed, please reach out. For the Group Internet Based delivery method, an upcoming program will be reviewed. For the QAS self study delivery method, the selected program will be reviewed.

NASBA will send a report of audit findings from each desk audit that will include any deficiencies noted during the desk audit review. If there is a minor deficiency, like a required element missing from the promotional materials, the deficiency will need to be corrected for future program offerings.

Generally, audit failures result from a significant deficiency from the Statement on Standards for Continuing Professional Education (CPE) Programs (2019) (Standards), which could impact the Certified Public Accountant (CPA) and the CPA’s ability to use the CPE credits issued. The most common causes for audit failures are inadequate attendance monitoring policies coupled with insufficient attendance monitoring documentation and incomplete or inaccurate information on the issued certificates of completion.

As a result of the increased audit failures, which has grown to an unacceptable level, the National Registry team has instituted a new audit policy, starting with the 2020 audit cycle. For those who have completed a Registry renewal since the beginning of 2020, a notice of the new desk audit policy should have been acknowledged in renewal application.

If a desk audit results in an audit failure, then a financial penalty will be assessed equal to 25 percent of the most recent renewal fee paid by the sponsor. For example, if renewed for one to 15 program offerings, which is equal to a renewal fee of $795, this would result in an audit failure penalty of $198.75.

For an audit failure, the sponsor must also submit a written corrective action plan within 30 days of receiving the desk audit report. The sponsor will be subject to a follow-up audit to ensure the corrective action plan has been operationalized.

Ideally, the National Registry team hopes this trend in non-compliance with the CPE Standards and audit failure penalties will cease to exist. In the meantime, a financial penalty was deemed the most effective course of action to reverse this trend.

Have questions? Please contact the National Registry team. The most effective way to reach the team during these times is by email at cpe@nasba.org.