AICPA issues guidance on potential mobility changes

Practice mobility and substantial equivalency are in the spotlight as various state legislatures look to change education and experience requirements for CPA licensure.

To help CPAs and firms continue to practice successfully across state lines and remain in compliance with regulations should changes be enacted, the AICPA has issued guidance that includes an overview of the issue and a checklist to explain the effects of new rules.

“With states introducing or looking to introduce legislation, and the issue of CPA mobility consistently being in the press, our members and firms need to be aware of what the consequences may be to the potential loss of mobility,” said Marta Zaniewski, vice president, AICPA State Regulatory & Legislative Affairs. “This interstate practice compliance checklist is a resource that aims to explain how CPAs may need to work and conduct business across state lines in a changed regulatory environment.”

The current CPA licensing system

CPAs in good standing with their state boards of accountancy presently benefit from practice mobility — a licensing system that allows CPAs to practice across state lines without having to acquire an additional license.

Mobility revolves around the concept of “substantial equivalency,” which ensures consistency in educational, examination, and experience standards across states.

Currently, to meet substantial equivalency standards, CPAs typically must have completed 150 credit hours of undergraduate or graduate-level studies, successfully passed the Uniform CPA Exam, and have accrued at least one year of relevant experience. CPAs who meet the standards for education, exams, and experience can practice both in person and virtually outside of the state in which they are licensed.

Substantial equivalency underpins mobility; it enables CPAs to serve clients across state lines without having to gain an additional license while also ensuring the public is protected by ensuring CPAs meet licensing requirements.

State-specific approaches to determining substantial equivalency exist, but currently, all jurisdictions except for Hawaii grant CPA mobility. If pending state legislation passes in one state, however, there may be larger repercussions for that state’s CPAs and their ability to practice in other jurisdictions. Simply put, if a state unilaterally changes its licensing requirements, CPAs in that state may be faced with a complicated compliance environment in which they may not be able to use CPA mobility outside of their home state.

“With CPA mobility, CPAs can practice across state lines without notice or paying a fee to state licensing boards. If mobility is disrupted, CPAs will need to be aware of state laws and rules, and potentially provide notice and fee before engaging any client,” said Zaniewski. “We want to ensure CPAs aren’t surprised by the laws and rules they need to be aware of while working with clients across state lines. Furthermore, reciprocity may not always be available if certain licensure requirements aren’t met in a state, and therefore a CPA would have to apply for an initial license. Licensing processes outside of CPA mobility take more time and individual effort than what CPAs are currently accustomed to.”

Requirements in various states may change

Actions are being pursued in states to modify education and experience requirements.

In Minnesota, the state society introduced legislation that would create alternative pathways that currently do not exist in any other jurisdiction. (Editor’s note: An earlier version of this article mischaracterized a portion of a South Carolina Association of CPAs proposal posted on its website. That reference has been removed from the article.)   

“We believe upending mobility would be a grave mistake,” said Susan Coffey, CPA, CGMA, AICPA & CIMA CEO of public accounting. “But with some states pursuing legislation that impacts CPA mobility well beyond their own borders, it would be irresponsible for us not to have resources in place to reflect those potential outcomes and stakes. As with other matters, the AICPA is committed to providing CPAs and CPA firms the information they need to manage the change.”

For more information, visit the Protecting CPA Mobility webpage.

— Mari Sagedal is a senior content writer at AICPA & CIMA, together as the Association of International Certified Professional Accountants. To comment on this article, contact Jeff Drew at jeff.drew@aicpa-cima.com.