Making Practicing Perfect: The VSCPA and Practice MobilityThe analogy often used to describe the national CPA mobility issue is simple: When you get into your car and drive from state to state, you carry your state driver's license with you. You're allowed to drive in any state in the country, but you're subject to each state's laws, regulations and enforcement. The same doesn't hold true for CPA licenses. Depending on the state, it's not that easy. You cannot get your CPA license and automatically practice in any state with that license. That concept, called substantial equivalency, is practiced in Virginia, but most states have various rules, such as filling out a form, registering with the state's accountancy board and so on. "We believe very strongly we have to see quick changes in state laws to allow people to move across state lines," said Barry Melancon, president & CEO of the American Institute of CPAs (AICPA). With business crossing state lines in an age of instant communication, it's a major headache for CPAs. Now there is a national solution on the table. The UAA Draft In December 2006, the National Association of State Boards of Accountancy (NASBA) and AICPA issued an exposure draft of changes to Section 23 of the Uniform Accountancy Act (UAA). The revisions, according to the draft, offer a comprehensive system for permitting licensee mobility while making explicit state boards' authority to regulate all who offer or render professional services within their jurisdiction, regardless of how those services are being provided. The draft specifically explains that CPAs who render professional services "in person, by mail, telephone or electronic means" will be granted practice privileges and will not have to notify states to render those services. And the draft explicitly states that CPAs will be subject to each state's rules and regulations. "We are making a major push with NASBA to get this passed among a majority of states," Melancon said. The new rules will put in place "true substantial equivalency" — without a "yeah, but" clause, he emphasized. That means that states will have to pass and adopt the changes without making their own modifications — no notification fees, forms or other impediments to mobility. By keeping substantial equivalency a state issue, Congress does not need to get involved. However, if the states do not pass UAA changes, the AICPA may have to turn to Congress for a legislative solution.
"We're hopeful we can get this done," Melancon said. We need your help! The VSCPA will take an official position on the exposure draft, and we'd like member input. Please submit your feedback to VSCPA Technical Services Manager Emily Walker at (800) 733-8272 by April 2, 2007. Comments on the draft are due May 15, 2007. Visit www.aicpa.org or www.nasba.org to read the draft and submit comments. Recent State Issues In 2006, mobility issues came to the forefront due to problems in California and Illinois. In February, the AICPA and state societies, including the VSCPA, expressed concern to California Gov. Arnold Schwarzenegger about the state's practice privilege requirements, which conflicted with the UAA and made it difficult for out-of-state CPAs to practice in the state. As a result, the California Assembly passed a bill to allow out-of-state CPAs to temporarily practice in California, provided they do not solicit California clients or assert or imply they are licensed to practice in California. And in Illinois, a problematic situation would have required out-of-state CPAs filing returns in Illinois to get an Illinois CPA license, even if the client was not located in Illinois. Illinois regulators stepped in and issued an emergency rule to address the issue. The Illinois CPA Society is now drafting mobility legislation to curb future problems. More in-depth information on the issues in these states is archived on the VSCPA Web site. Surrounding States While Virginia CPAs do business in all states, it's especially common in the close surrounding states. Here are surrounding states' requirements at press time: Maryland
To practice in Maryland, out-of-state CPAs must secure a reciprocal license, but only if they meet the experience and educational requirements in effect in Maryland at the time their original Virginia license was issued. If those requirements were not the same, the applicant must have at least four years of work experience, outside of Maryland, in the last 10 years since passing the CPA Exam. And, if these requirements cannot be met, an out-of-state CPA can apply for a limited license, valid one year, which allows him or her to provide services in Maryland for one specific accounting engagement. North Carolina
In North Carolina, anyone can practice public accountancy by paying a minimal privilege license fee to its Department of Revenue. However, anyone not licensed by the North Carolina State Board of CPA Examiners as a CPA is restricted to using only the term "accountant." Even though a person is a CPA in another jurisdiction and holds a position in a field such as industry, government or education, a certificate of qualification from the Board must be obtained before using the CPA title while practicing in North Carolina. Tennessee
A $65 application fee must be paid by out-of-state CPAs to be named substantially equivalent in Tennessee by the Tennessee State Board of Accountancy. Temporary practice permits and a fee are also required to set up a temporary practice. West Virginia
To practice in West Virginia, out-of-state CPAs must secure a "Substantially Equivalent Practitioner License" for a fee to the West Virginia Board of Accountancy. To set up a temporary practice, CPAs must complete a license application and pay a fee. For information on other states, visit the "State Licensing Issues" area of the AICPA Web site. BOA and Mobility Virginia has the distinction of being an excellent model for substantial equivalency. Out-of-state CPAs do not have barriers to practice in Virginia, such as notification or fee, as long as their states' requirements are "substantially equivalent" to Virginia's. This doesn't help Virginia CPAs much, however, as they navigate all the other states' rules and regulations just to conduct simple business like filing a client's tax return. In February 2007, the Virginia General Assembly passed legislation from the Virginia Board of Accountancy (BOA) to update the Commonwealth's Accountancy Statute with a principles-based approach. The new approach reduces licensing requirements; clarifies that all persons and firms using the CPA title in Virginia or providing services to persons or entities in Virginia are subject to the same statutes and regulations; and clarifies the standards of conduct and practice. The BOA legislation changes the statute to state that if a CPA is principally located elsewhere, he or she does not need a Virginia license to use the CPA title in Virginia, but must have a license from another state and must comply with the rules of substantial equivalency. Just as the UAA draft states, the BOA legislation clarifies that those who use the CPA title in Virginia consent to the jurisdiction of the BOA and its regulations, disciplinary procedures and authority. Advocating for VSCPA Members The VSCPA supports the BOA's position on substantial equivalency and believes all states should follow its model. VSCPA members should be able to practice in other states without jumping through hoops. The answer is not for CPAs to stop using their hard-earned CPA designations when doing business in other states. On June 6, 2007, the VSCPA and BOA will host the Eastern Regional Mobility Summit in Williamsburg, a forum for state society executives, AICPA staff, NASBA representatives and others to discuss the issue and its solutions. Questions about practice mobility? Contact VSCPA Government Affairs Director Emily Walker at
or (800) 733-8272.
What is Substantial Equivalency? According to the Virginia Board of Accountancy (BOA), substantial equivalency is met if: - The BOA has evaluated and listed the state as substantially equivalent.
- The CPA has demonstrated he or she has met education, CPA Exam and experience requirements that are substantially equivalent to Virginia's requirements.
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