News

CPA Advocate August 2019

by Emily VanMeter | Sep 11, 2019   ()

Marijuana Regulatory Agency
In an effort to reduce the cumbersome structure of the previously developed Bureau of Marijuana Regulation, Governor Whitmer signed an executive order eliminating it and creating the Marijuana Regulatory Agency. The new agency will handle both medical and recreational marijuana in Michigan. The action creates more independence from the Department of Licensing and Regulatory Affairs (LARA) for the new agency. Under this structure, the agency is now requiring the last 12 months of financial statements rather than the three years that were previously required during the initial application process for licensure. The agency can request additional information if deemed necessary. The MICPA will continue to work closely with the new agency to ensure that our members have a firm understanding of what is required from the CPA profession in this industry.

The MICPA recognizes that many of our members are interested in engaging in this new industry and are looking for guidance. As such, we are planning to hold a conference on December 5th in Troy, more details will be released soon!

For more resources on the marijuana industry, visit the MICPA’s website.

The attestation of capitalization on behalf of clients is a service that requires firms to participate in peer review. As firms who are not currently enrolled in the peer review program determine whether they are going to engage in this new industry, it is important that they understand the peer review requirements. Questions can be directed to the MICPA Peer Review Department by calling 248.267.3700.

Alternative Dispute Resolution
In December 2017, Governor Snyder signed legislation that allows for a non-judicial dispute resolution process. It enables the Department of Treasury to settle tax disputes with taxpayers without litigation. Through the Alternative Dispute Resolution process, the Department can accept less than the full amount of tax due or increase the refund amount. If a settlement is not made, or if there are remaining issues to be settled after this process, the informal conference process will proceed. Alternative Dispute Resolution is available to all taxpayers who make a timely request for informal conference. Guidelines for the Alternative Dispute Resolution process can be found on Treasury’s website.

Since the passage of this legislation, many taxpayers are still using the Informal Conference process rather than the Alternative Dispute Resolution process. Please know that this is an option for your clients as you work to settle disputes with the Department.

2019-2021 CPA Licenses
The reporting deadline to renew CPA licenses for the 2019-2021 reporting period was
July 30, 2019. If you have received your new license, you may have noticed that the
expiration of the license is 7/31/2021. In the past, CPA licenses have expired on 12/31
of every odd year even though CPAs are required to renew their license by 7/31.

The impetus for the change comes down to the CPE audit process and licensees not
undergoing that audit until close to a year after submitting their CPE. If a licensee is
required to provide proof of CPE, they’re required to do so under the current system
almost a full year after submitting which has presented LARA and the State Board of
Accountancy with numerous issues. The demand on a licensee to reproduce records
that far after submission is a burden, but also, if a licensee had not completed the
necessary CPE, they’re still able to practice while having not met their statutorily
required CPE.

With an expiration date of 12/31, the audit process cannot begin until March. This
results in licensees often being questioned about the CPE that was submitted a year
after the submission. With the expiration date moving to 7/31 the audit process will begin sooner, making it easier on licensees who are under audit by the department. The license itself now lasts for 2 years – 8/1/2019-7/31/2021 which is different than the previous license which didn’t expire until 12/31 but was supposed to be renewed by 7/31 or the licensee faced late renewal penalties.

If you have not renewed your license, please reach out to the Government Relations
Department at rreardon@micpa.org or 248-267-3725 for more information about next
steps.

Hosting Standards Took Effect, July 1
CPAs and firms need to take note that the new “Hosting Services” interpretation (ET
§1.295.143) in the AICPA’s “Independence Rule” (ET §1.200.001) is effective as of
July 1, 2019. The interpretation focuses on CPA firms who provide software solutions
to clients, including cloud-based tools. For example, serving as the sole host of a
client’s financial or non-financial information system could result in an impairment of
independence.

PEEC has approved the release of six FAQs on hosting services. Look to pages 21-23
for questions addressing issues that the AICPA receives the most inquiries on.

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