Six months removed from her year as VSCPA Board of Directors chair, Lisa Germano, CPA, hasn’t slowed down. Her latest project is to help the profession find a way forward from damning reports on quality, notably the U.S. Department of Labor’s (DOL) employee benefit plan (EBP) audit quality study released in 2015.
To recap, the DOL studied 400 EBP audits from 2011 and found a 39 percent major deficiency rate, with deficiencies increasing in firms that performed fewer audits. Employee benefit plans are Germano’s bread and butter at her firm, Actuarial Benefits & Design in Midlothian. She got her first real look at the DOL report at a national EBP conference last year and knew immediately that she had a role to play in the conversation.
That’s exactly the way Germano described her vision in a luncheon Sept. 27 at the VSCPA’s 46th Annual Virginia Accounting & Auditing Conference in Roanoke. She wants EBP auditors to band together and take ownership of the solution to the issues presented in the DOL report.
“Employee benefits is where I live and breathe every day. My clients do work with auditors, and those auditors do use our firms as a resource,” she said. “…I felt like there was this groundswell from the government that they wanted to take ownership of compliance and governance for employee benefit plans.”
Germano teamed with VSCPA staff last year to put on complimentary EBP Audit Quality Town Halls across the state. Since then, she’s joined with other EBP experts across the country to start an EBP newsletter and virtual town hall meetings on the subject.
That’s just part of the efforts from the VSCPA and the profession to improve quality. The American Institute of CPAs (AICPA) runs the Center for Audit Quality, focused on audits of public companies, and its Enhancing Audit Quality initiative provides similar resources for auditors of private companies. With a similar study to the DOL report planned for Circular A-133 single audits, the profession is working to enhance quality in those audits, and the VSCPA has a resource center on that topic.
The thrust of Germano’s vision for audit quality improvement is more grassroots in nature — a movement of CPAs across the country joining forces to make everyone better practitioners. She applauded the aforementioned efforts from the VSCPA, the AICPA and other organizations to provide training and resources, but says that even those organizations can’t provide the magic bullet on their own.
“We’ve done so much to give resources, and there’s one thing that we missed, and it’s member to member,” she said. “How do we connect the right member with the right member?
“Employee benefits is a really difficult place to specialize in. Once you think you’ve got it figured out, you find out you don’t. And the best way to figure out if you’re doing it right is to find someone else who, like you, wants to do the right thing.”
Wanting to live up to the standards of the CPA credential and do the right thing is a major point of pride for Germano. When she was installed as the VSCPA’s chair in 2015, she gave welcome bags to each attendee at the annual meeting containing CPA-branded gear, including a CPA pin similar to the one she wears every day.
The reason? She wanted to instill pride in the credential and offer a reminder of the lofty standards it represents. Germano is a staunch believer in the profession’s ability to self-regulate, which is why she was so upset by the DOL report and the accompanying recommendations, which included expanding its own authority to establish standards, requirements and qualifications for auditors and assess civil penalties.
“Every CPA holds dear professional ethics, professional judgment,” she said. “That’s part of being a CPA. It’s what it’s all about. How can we sit back and let the Department of Labor take that professional judgment away?
“The profession wants everyone to have that pride in being a professional,” AICPA Director of Federal Regulatory Affairs Ian MacKay, CPA, said at the luncheon. “We classify people as people who do it right, some who want to do it right and some who don’t want to do it right and shouldn’t be doing the audits. If you’re here, we know where you stand. There are resources for you.”
The goal of MacKay, Germano and other CPA audit quality champions is for the profession to rise to the challenge and bring audit quality up of its own accord.
“Perhaps we can do this together, from the grass roots up, instead of having the Department of Labor tell us what might need to be done from a regulatory perspective,” Germano said. “My goal is to get the spotlight off, get members talking. We’ll say, ‘You might have had to call attention to us. You might have had to light that fire. But we did it as a profession.’”