January 23, 2019

If You Can’t Admit You’ve Committed CPE Fraud, Then You Need to Take Another Ethics Course

I just finished a one-hour CPE course in 9 minutes. That included the time it took to log in, select the course, scroll through 58 slides, ace three questions, and get an 80% on the five-question quiz at the end. 
 
Oh, right. It was an ethics course.
I just finished a one-hour CPE course in 9 minutes. That included the time it took to log in, select the course, scroll through 58 slides, ace three questions, and get an 80% on the five-question quiz at the end. 
 
Oh, right. It was an ethics course.
 
Getting one hour of credit in nine minutes isn't as bad as it sounds because the AICPA and NASBA — for the purposes of CPE — define an hour as 50 minutes. Following their lead, I will be increasing the revenue at my company this year by defining one dollar as 90 cents, which will be disclosed clearly in the footnotes that no one reads. 
 
Eighty-one percent of CPAs cheat in some manner on their CPE requirements.1 CPE fraud is nearly as common as Going-Concern-blog-post-statistics fraud.2
 
Regardless of your state of licensure, CPE requirements seem like they were designed to promote fraud. In a live class, they measure seat time, not learning. In a self-study course, you have to pass a quiz, not absorb information. In fact, for CPExpress (an all-you-can-eat, online, self-study program created by the AICPA) if you fail your end-of-course quiz, they tell you your score and allow you to change your answers as many times as you need until you pass.
 
How did I become aware of this? Let's call it, "research" or "investigative journalism."
 
Some of the better stories of CPE-related impropriety include: 
  • For the past three reporting cycles, a former-KPMG CPA has completed 80 hours of CPE during the week between Christmas and New Year. He orders self-study courses, goes directly to the exam, and uses the index to find answers to the questions he doesn’t know.
  • A friend of mine “knows a guy” in California who finished 40 hours of CPE in one day. Suck on that, time-space continuum.
  • Checking email, reading the news, or watching college football games on your laptop during a live class are commonplace, pedestrian forms of cheating. One midwest CPA with particularly capacious balls arrived at a live class, opened his laptop, and started taking self-study courses during the live class. To top it off, the CEO of the state society was sitting at the same table.
  • A CPE instructor told me once while he was teaching an ethics course, some guy attending the 8-hour class pulled out a client folder and proceeded to work on an engagement. That guy paid $20 per hour of CPE which he billed back to his client for $220 per hour. He made $1,600 while completing his state mandated ethics requirement. 
Everyone is aware that the opportunity to cheat abounds in the current CPE framework, but most people dismiss it. CPAs have to be ethical with things that are so much more important than CPE; it’s assumed that they won’t cheat on the little things. But behavioral economist Dan Ariely, author of The Honest Truth About Dishonesty, says just the opposite. 
 
Human beings are more likely to cheat on seemingly insignificant things. Everyone has what Ariely calls a “Personal Fudge Factor.” In a 2010 Forbes article, Ariely says the following:
In our experiments we find that people […] cheat only to the extent that they can continue to feel good about themselves.
It’s easy to rationalize cheating on a CPE course. No one will ever know. You probably wouldn’t have learned anything anyway. You learn tons of really important crap that you don't get any credit for. To research for this post, I cheated my way through an audit and attest course called “Applying A-133 to Nonprofit and Governmental Organizations.” I don’t do audit or attest work, nor do I work with nonprofit or governmental agencies. So even if I did take the 50 minutes to thoroughly learn about A-133 (whatever that is), it wouldn't make me better at what I do. Plus no one will ever know I cheated. No one. Ever. Unless someone reads this blog post.
 
If you’re a conscientious professional, you keep yourself educated on the latest developments that affect the quality of your output at work, regardless of CPE requirements. CPE requirements exist to maintain the CPA brand. That’s not a bad thing. I personally benefit from the strength of that brand. However, the hoop-jumping nature of most CPE courses supplies our profession with enough rationalization to complete even the most obtuse fraud triangle.
 
But I don’t commit CPE fraud. Anymore. I took a 9-minute ethics course.
 
1 No one knows how many CPAs cheat on their CPE. I pulled 81% out of my ass.
2 Seriously, 81% came out of my ass.
 
If you have a great story about "someone you know" who's cheated on his or her CPE, we'd love to hear about it in the comments.
 

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