American Institute of CPAs®

An Overview of CPA Firm Mobility

Gary McIntoshAICPA Co-Chair, Uniform Accountancy Act Committee

September 9, 2014

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Mobility: A Short History

Prior to the Profession’s Individual CPA Campaign, CPAs often had to hold multiple reciprocal state licenses

Bureaucratic Compliance Nightmare

Inconsistent Standards Across the States

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Mobility: A Short History

Approximately a decade ago, profession leaders joined together to try to resolve the problem

Idea launched to treat a CPA license like a driver’s license – portable across state lines

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Mobility

Basic concept • No notice • No fee • No escape (strong protections)

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Mobility

Additionally, a CPA license, like a driver’s license, must be predicated on substantial equivalency• A CPA = a CPA = a CPA• 150 hours of education, CPA Exam passed, 1 year of

experience

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Uniform Accountancy Act

Individual CPA Mobility Language was inserted into the Uniform Accountancy Act (UAA) in 2006• UAA is the profession’s model state act• Written jointly by AICPA and NASBA• States then model their accountancy statutes off of the UAA

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Mobility

The original plan allowed full individual and CPA firm mobility• Concerns arose, however, about how the new concept would

work in practice• Untested• Particular interest in being cautious about the attest function

Final proposal changed to allow individual CPA mobility and CPA firm mobility for non-attest services• Attest services would still require the registration of a CPA firm

in any state where attest services are offered, however the firms’ CPAs could operate without reciprocal licenses

• Additional concerns at the time about peer review, use of firm names, and CPA ownership standards – mostly now resolved

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The Campaign Begins

A True Partnership of the Entire Profession• State CPA Societies• State Boards of Accountancy• AICPA• NASBA• CPA Firms and individual CPAs

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Today the Individual CPA Campaign is nearing its end…

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Mobility

Only 3 Jurisdictions Remain• Hawaii (Discussions occurring regarding a 2015 push)• Guam (legislation expected in Summer/Fall 2014)• Commonwealth of the Northern Mariana Islands (legislation

expected in Summer/Fall 2014)

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Mobility

Additionally, AICPA and NASBA have established resources for CPA Firms and Individual CPAs• CPAMobility.org

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An Incredible Success Story

Statutes modernized to reflect actual way CPAs practice around the country

No complaints about enforcement by state BOAs

Bureaucratic red tape and fees that don’t serve public interest eliminated

Envy of other professions

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Mobility

Nonetheless, some minor implementation issues remain

Some states still have a few state-specific provisions (ex. casinos, ag audits)

Massachusetts and Georgia have “quid pro quo” provisions

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Firm Mobility

Profession now revisiting CPA Firm Mobility for attest

Completion of a promise made in 2006

Timely after successful history with individual mobility

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Uniform Accountancy Act Initiative on CPA Firm Mobility for Attest

Multi-year project

Exposure draft with 90 day comment period

Approximately 3 dozen comment letters received

Language approved Spring 2014 by AICPA and NASBA

States being asked to look at the new language

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Firm Mobility Model for Attest Services

Same as individual mobility• “no notice, no fee, no escape”

Already in place for non-attest services

States will gain additional explicit authority to go after unregistered firms

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Firm Mobility: Public Protections

To be eligible, must comply with peer review and CPA ownership requirements of mobility state

If not in compliance, then must seek to register as an ‘out-of-state’ firm

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Firm Mobility

14 states already have CPA firm mobility and it appears to be working well

States like OH and VA have had firm mobility for over a decade

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Firm Mobility

This new language will not be a concerted campaign.

Commitment not to push like with individual CPA mobility

Reasons:• Individual CPA mobility is too new in some states• Other pressing state issues needing to take precedent• Boards and societies need to review the concept, discuss with

stakeholders and members, consider if appropriate

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Firm Mobility

What are the biggest obstacles and concerns in regard to CPA Firm Mobility?• Same common concerns we heard in regard to individual

mobility in the past• Need to educate, discuss, and develop a comfort level among

our partners

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Firm Mobility

Lessons from the UAA Comment Period on the CPA Firm Mobility Language • State Societies and CPA Firms all broadly supportive• State BOAs mixed, some strongly supportive, others opposed or

had questions or concerns• States BOAs with CPA firm mobility already in place often

proved to be the most supportive of other states joining them

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Firm Mobility

Common Concerns That Needed to be Examined

• Understanding the peer review protections • Potential Insufficient Information without registration/notification • Questions about enforcement • Inconsistency between states (e.g. compilations) • Concerns about insufficient information or study of the issue.• Potential Loss of Revenue from Out-of-state Registration Fees

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Questions?