Advocating for California CPAs

New Laws, Regs Usher Change for California CPAs

A new era has arrived for California CPAs. Here’s what you need to know:

• 150-hour education requirement : Makes California a substantially equivalent state in terms of the Uniform Accountancy Act. 
• Mandatory peer review: Effective Jan. 1, 2010, for firms and sole practitioners providing audits, reviews and compilations.
• Mandatory license status disclosure: Effective Jan. 1, 2010, CPAs with inactive licenses must disclose their license status whenever they use the CPA designation.
• Taxpayer privilege reinstated: Effective immediately. Realigns California with federal provisions.
• New CPE demands for license renewal: Ethics changes and minimum annual requirement set to go into effect for license renewals after Jan. 1, 2010, and license renewals after Jan. 1, 2012.

150 Hours Required

• Changes California law so that CPA candidates applying for licensure after Jan. 1, 2014, will have to meet the Uniform Accountancy Act’s 150-hour educational requirement prior to licensure, which includes a total of 150 semester hours, as well as a bachelor’s degree and one year of work experience.
• Sunsets Pathway 1 (licensure with 120 units and two years of experience) effective Jan. 1, 2014.
• By adopting this national standard, California should be considered a substantially equivalent state for purposes of mobility, allowing current California CPAs to provide services in most other states without first notifying the affected state board of accountancy and without paying a fee to the state.
• CPAs licensed prior to 2014 automatically will be grandfathered in as substantially equivalent.
• California CPAs providing services in other states would be subject to discipline from those states’ respective boards of accountancy and required to follow the particular state’s laws. Some states only require that out-of-state CPAs register with their board of accountancy when the CPA is providing audit services to an entity headquartered in that other state. A few states also have other rules, so check the state’s law prior to providing services.
  

Taxpayer Privilege Reinstated

• Reinstates taxpayer privilege for those taxpayers using the services of CPAs and enrolled agents consistent with the Internal Revenue Code Sec. 7525 enacted in 1998 as part of the Taxpayer Bill of Rights.
• Confidentiality is limited to tax advice, other than advice regarding tax shelters, and applies only in non-criminal situations. 
• Note that IRC Sec. 7525 allows for limited confidentiality for communications between tax practitioners and their clients as defined in the law. The confidentiality is limited to tax advice, other than advice regarding tax shelters, and applies only in non-criminal situations. (See “ What is Privileged? ,” California CPA , November 2009).