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Capitol Beat: CPA Day Success
California CPA March/April 2010
Also: Qualifying Experience Reviewed
By Jeannie Tindel & Bruce C. Allen
Participants met with legislators and their staffs to thank them for supporting CalCPA’s legislative agenda last year, promote CalCPA’s financial literacy campaign and share observations that should be considered if there is a move to impose some kind of sales tax on accounting services.
Cash-strapped California is considering expanding the sales tax base to include specific services as one option to increase the state’s tax revenue.
CPA Day attendees heard from Assembly members and CPAs Fiona Ma (D-San Francisco) and Roger Niello (R-Sacramento), who both carried critical pieces of CalCPA’s legislative agenda last year. These legislators complimented CPA Day participants on their dedication and participation in the process.
California Board of Accountancy Reviews Qualifying Experience
The CBA’s Qualifications Committee is reviewing the qualifying experience required to become a California CPA.
When California’s licensing standards were last updated in 2000, candidates could enter the profession by using experience gained while working in industry, public practice or government under the supervision of a CPA with an active license.
General experience includes providing any type of service or advice involving the use of accounting, attest, compilation, management advisory, financial advisory,
tax or consulting skills.
To qualify for licensure, the experience must meet applicable professional standards. This provision is generally consistent with the Uniform Accountancy Act provisions adopted by most other states. The CBA refers to CPAs licensed in this manner as “G” licensees. However, CBA laws and rules break with the UAA in that G licensees are not allowed to sign audits and reviews.
To sign audits and reviews, candidates must have a minimum of 500 hours of supervised attest work, which, in theory, provides them with sufficient experience to plan and perform an audit with minimal supervision. Individuals who have completed the attest experience are referred to as having an “A” license.
All CPAs licensed prior to the experience requirement changes made in 2000 have the “A” license. This holds true even if they have never done any attest work, or if they have never taken any continuing professional education related to audits or reviews.
The UAA recognizes that 500 hours essentially equal three months of experience do not really qualify a CPA to lead an audit or attest engagement. For example, special industry engagements and complex public company audits require years of experience. Therefore, UAA states ensure quality and adherance to professional standards by relying on peer review, a process which an independent expert in the field evaluates the experience of the CPA performing the audit, along with the safeguards in place within the firm.
It should be noted that licensing applicants have already studied accounting and auditing in college and passed the rigorous Uniform CPA Exam, which includes an auditing section.
The Qualifications Committee concluded at its preliminary meeting that it would recommend the CBA adopt a regulation to more clearly define what the “G” license experience should be. At a minimum, the committee felt that some part of the general experience requirement should include preparation of compilations. A Qualifications Committee subcommittee will develop recommendations for regulatory language that will be brought to the next Qualifications Committee Meeting in the spring.
Additionally, the Qualifications Committee will recommend that the definition of “supervised experience” be narrowed to mean that the applicant’s supervisor shall have reviewed and evaluated the applicant’s qualifying work on a routine and recurring basis, and that the supervisor shall have authority and oversight over the applicant.
CBA board member Bob Petersen was concerned that the definition of supervision might impact the wage and hour law cases being brought against small firms. He questioned whether CPAs in public practice actually “supervise” and also indicated that such “supervisors” often follow checklists and probe the candidates’ reasoning and conclusions, but do not go back to the source documents.
With that comment, the Qualifications Committee felt that the supervision standard should be applied to government and industry experience, but not to the public accounting setting.
CalCPA has long supported conforming California law to the UAA. While it’s certainly within the CBA’s purview to recommend changes to licensing standards, there is no documentation that California’s experience requirement provides better consumer protection than the experience requirements in place in a majority of other states or that allowing CPA candidates to become licensed with general experience poses any threat to consumer protection in California or elsewhere.
Bruce C. Allen is CalCPA’s director of government relations. Jeannie Tindel is CalCPA’s director of legislation.