Capitol Beat: All Aboard 150 Hours
California CPA magazine: December 2008
by Bruce C. Allen and Jeannie Tindel
It’s almost 2009, which makes the California Legislature 32 years late hopping on the 150-hour train.
Why is it important to get on the train?
Adhering to national licensing standards is the only way California can obtain substantial equivalency, which will allow California CPAs to “practice” in other states on behalf of consumers.
What do you mean “practice?”
You don’t need to physically go to a state to practice in that state. Practice can mean:
• File an out-of-state tax return.
• Speak to an out-of-state banker on behalf of an in-state client.
• Send a business-related e-mail out of state.
• Perform an inventory in an out-of-state warehouse for an in-state audit client.
• Perform a forensic investigation into an out-of-state manufacturing site of a California-based company.
You get the idea.
Will other states really take enforcement action against us?
Some states, such as Oregon, already do and several states passed legislation that says starting in 2012, CPAs from nonsubstantially equivalent states will not be able to practice in their states without obtaining that state’s license.
What would an enforcement action look like?
You could be barred from future practice in the state in question, and the charge of practicing without a license would be sent to the enforcement folks at the California Board of Accountancy, who might levy a fine, suspend your license or revoke it.
How do we get California into compliance?
Conformity with national licensing standards defined by the Uniform Accountancy Act requires adherence to three main licensing requirements:
• Passage of the Uniform CPA Exam;
• One year of work experience; and
• 150 semester hours of education that include a bachelor’s degree and a specified number of units in accounting and business subjects.
How is California out of synch?
California issues about one-third of its licenses annually to candidates with only 120 hours of education.
How close are most graduates to 150?
The average California CPA candidate today has completed 147.5 semester hours of education prior to sitting for the CPA Exam.
Why did the profession decide on more education?
With the proliferation of standards and the increasing complexity of business, practitioners recognized that candidates needed additional units to achieve the broad-based communication skills, computer knowledge and analytical skills necessary to enter the profession and succeed. National CPA Exam data shows that candidates with 150 or more hours of education have far higher pass rates than those with only 120 hours of education.
What does the regulator say?
The public-majority CBA supports the proposed changes to California’s CPA licensing laws (i.e., adopting the 150-hour requirement as the sole educational pathway to licensure).
Is California the only 150-hour holdout?
The District of Columbia and 46 states have adopted the 150-hour rule. It is the national standard, and, simply put, states that do not mandate 150 hours of education for all CPA candidates are considered substandard. California, New Hampshire, Colorado and Vermont do not meet the UAA’s standard.
What difference does it really make?
Assuming that reasonable minds could differ about whether the “best” educational requirement is 150 hours, 120 hours or some number in between, the fact is that the 150-hour standard, embodied in the UAA, is the national standard. California’s failure to adopt that standard would deprive California CPAs of interstate mobility and severely hinder the ability of California CPAs to operate nationally and internationally in the global marketplace. If California retains its 120-hour option, the state would not have licensing requirements “substantially equivalent” to those of the UAA.
What is CalCPA doing about the problem?
CalCPA has been fighting the 150-hour fight for years. In 2001, we experienced our greatest success when 150 hours became a licensure option, and every year since, more and more candidates have chosen to be licensed via the 150-hour pathway. In 2009, CalCPA will sponsor legislation that will mandate the 150-hour pathway as the only pathway to licensure effective 2012. The bill would grandfather in all CPAs who are licensed before 2012.
What can I do?
Contact your legislators in the state Assembly and Senate. Explain how it is important to California businesses and consumers that their CPAs be able to serve their needs outside of California. And, frankly, that you work hard to uphold the integrity, trust and ethics of your profession, and your CPA license should not be second class.
Where do I get more information?
For more resources, including a link to your legislators, visit CalCPA's mobility homepage or contact our government relations team at (916) 441-5351.
Bruce C. Allen is CalCPA’s director of government relations. Jeannie Tindel is CalCPA’s director of legislation.
