Mobility Update

California CPA magazine: May 2008

Legislation sponsored by the California Board of Accountancy, AB 2473 (Niello/Ma) to allow “accountancy mobility,” was pulled off the Assembly Business and Professions Committee’s agenda April 9. It’s clear the CPA profession must further educate legislators so that the issue of CPA mobility can be addressed.

As bill co-author Assembly Member Roger Niello said, “It wasn’t the right time … however, this is an issue that has begged for remedy for a number of years, and it
is an issue that other states have dealt with, are dealing with, or will deal with. At some point this issue will need to be addressed by California.”

Mobility legislation is sailing through other state legislatures with minimal effort and very few “no” votes. More than 2,000 legislators have already voted to remove unworkable statutes from their accountancy acts and 17 states have adopted the “No notice, no fee and no escape” provisions of the Uniform Accountancy Act adopted by the National Association of State Boards of Accountancy and AICPA.

We must continue to work to resolve the mobility issue and will call on members to talk to their own legislators about the problem and the need to address it quickly before things get worse.

It is important that everyone understand the issue and how it impacts business, clients and the profession. California leads the nation in so many things, but it appears that once again, we will be lagging until the lack of mobility is addressed.

AB 2473 would allow licensed CPAs from other states to provide certain services to California clients without being subject to a state notification process that provides no increased consumer protection. It also would allow California CPAs to service client needs in other states.

In addition, AB 2473 will protect California consumers by allowing the CBA to take disciplinary action against out-of-state CPAs for misconduct, including imposing fines, barring them from practice and reporting them to their local boards of accountancy.

Unfortunately, a small but vocal opposition to this bill is trying to back their position through a number of false claims. The following are myths (courtesy of the Coalition for Business and Consumer Choice) being communicated by opponents of AB 2473 and the facts about how the legislation will really benefit Californians.

MYTH: Opponents claim AB 2473 would somehow allow “fake” CPAs, criminals and those under investigation for malpractice to provide services in California.

FACT: Current law bars felons and those under investigation for malpractice or any other misdeeds from practice in California—and AB 2473 would continue
that prohibition.

MYTH: Opponents allege AB 2473 will imperil the fiscal lives of California families and small businesses because California consumers will not have access to information about the credentials or background of the out-of-state CPAs they may be working with.

FACT: Just as consumers can check the license and background of most California contractors and professionals, including CPAs, by calling or checking
the website of the professional’s licensing board, AB 2473 will encourage this same due diligence.

If California consumers require the services of a licensed CPA from another state, they can visit that CPA’s state board website or call the board directly to check the person’s background. Every state can quickly disclose background and any disciplinary actions either online or by phone. AB 2473 will not change this.

Furthermore, CPAs generally are chosen by their clients based on knowledge of the CPA gained either through referral or personal relationships. The scenario the opponents portray is unlikely, but even if pursued, consumers have the ability to check licensed CPAs’ credentials no matter in what state they are headquartered.

MYTH: Consumers are protected by the fact that the CBA website lists the names of out-of-state CPAs who have registered with the state.

FACT: The CBA lists the names of out-of-state CPAs who register in California, but does not conduct any background checks on these individuals. The system actually gives consumers a false sense of comfort that those listed are vetted and “approved.”

Another absurdity of this argument by the proponents is the fact that the “fake” CPAs or “bad actors” they fear would not register in the first place.

Further, there have been no reported consumer complaints about or problems with “fake” CPAs, nor were there before notification was put into place in 2006.

MYTH: Filling out a four-page form and paying a fee is a simple request of out-of-state CPAs who want to practice in California and there is no proof that this process causes a burden.

FACT: The California Legislature and CBA received complaints from thousands of CPAs from throughout the country when the notification requirement was
put into place.

Notification has caused many problems, including hindering CPAs’ ability to quickly address client matters (through conference calls, e-mails, etc.); placing an undue financial burden on CPAs (and thus their clients) who must register and pay fees in multiple states; and causing confusion for CPAs and their clients as California law is not consistent with other states.

That is why 17 other states do not require or have recently passed legislation to remove notification requirements—in most cases with no formal opposition.

MYTH: Opponents say that the CBA has not studied other state licensing and enforcement practices enough to ensure consumer protection.

FACT: Under AB 2473, the CBA will be able to directly discipline out-of-state CPAs if needed. It can fine, impose cost recovery, bar from further practice in California and refer CPAs to their own states for additional discipline.

AB 2473 is part of the national effort to increase regulation of the CPA profession and every state board of accountancy has expressed its intention of cooperating and assisting in discipline.

MYTH: Opponents claim that AB 2473 is an attempt to get around California licensing requirements for CPAs who conduct audits.

FACT: AB 2473 will require out-of-state CPAs performing audits of entities headquartered in California to register with the CBA. Current law allows out-of- state CPAs to sign attest reports if they are legally allowed to sign reports in their home states.

MYTH: Opponents oddly assert that AB 2473’s provision to increase CPA educational requirements is not an accepted concept and that it disproportionately hurts minorities.

FACT: There are 45 states that already require CPAs providing services in their states to have a minimum of 150 hours of education, including a baccalaureate degree—and AB 2473 will increase California’s requirements to this level. This also will allow all current and future California CPAs to practice in other states.
We can only conjecture why opponents claim that more education hurts some people.

If they are proposing that people would be burdened by the cost of an additional 30 hours of education, we know that outstanding financial aid is available for all students who need help with coursework.

Consumers of all backgrounds will benefit from California CPAs having more education.

To find out what you need to do to help deal with this problem, visit www.calcpa.org/mobility.