February 2007
President’s Message: Practice Privilege
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Practice Privilege
By Mark Croce, CPA
I recently returned from the Jan. 19-20 CalCPA Council meeting, so I thought I would give you an update on current CalCPA activities.
CalCPA has been very busy working for our interests, from efforts in New York (with the AICPA) to meetings in Sacramento (with the California State Board of Accountancy). Our team is working to iron out practice privilege issues. Indeed, California’s CPA licensure process, which allows several options for completing the experience requirement, and the state’s failure to conform in-full with the 150-hour requirement, has caused a California license to be viewed as not “substantially equivalent” to the requirements in many other states.
Practice privilege continues to be a hot-button issue for our profession and for all of us in California. Although we may have been aware of the need to register with the state boards of accountancy in other states when we physically enter their state to perform more than an “incidental and temporary” amount of work, how many of us have prepared tax returns for residents or non-residents of other states? It is recommended that if we are preparing these types of returns for businesses or individuals, we should check the websites of the various state boards of accountancy to ensure that there are no registration requirements.
The National Association of State Boards of Accountancy and the AICPA have agreed to forward a revision of the Model Accountancy Act, which would allow for practice across state lines without notice to the state boards. It would essentially replace the “incidental and temporary” standard that had served taxpayers and the profession for decades.
The CBA is in the process of defining “incidental and temporary” practice for those wishing to practice in California with a license from another state. California law allows out-of-state CPAs to provide temporary and incidental services to California clients without obtaining a practice privilege from the CBA.
Further, the Illinois Board of Accountancy had adopted a regulation that would have required any CPA signing an Illinois state tax return to have an Illinois permit to practice. This rule was to go into effect Oct. 1, 2006, but CalCPA and other state and national professional associations, wrote to the Illinois governor and urged him to intervene on behalf of the taxpayers of his state. Emergency regulations have postponed implementation while the issue is revisited by the regulatory agency.
Part of the groundwork necessary to implement the Model Accountancy Act is that state licensure requirements need to be considered “substantially equivalent” for CPAs to be able to move forward with our privilege to practice across state lines. As we know, under California law, CPA candidates have options (referred to as pathways) in their process to becoming a licensed CPA. These pathways involve both college credit hours and experience requirements. In addition, even those of us who have held a license for some time have the option to opt out of the 24-hour accounting and auditing education and eight–hour of fraud detection continuing education every two years if we do not perform attest work.
The majority of states has adopted the general experience requirement described in the Uniform Accountancy Act rather than retain the initial attest experience requirement. In addition, CPA firms and sole practitioners performing audits and reviews are then required to undergo mandatory peer reviews designed to evaluate the firm’s adherence to professional standards and the experience and competence of auditors.
California chose not to implement mandatory peer review and instead requires candidates to provide documentation that they can plan and conduct an audit with minimum supervision. Further, the CBA has determined that a minimum of 500 hours would be required to instill this knowledge in a candidate.
Historically, CalCPA has supported conformity with the Uniform Accountancy Act, including the 150–hour requirement for becoming licensed and mandatory peer review for those who conduct audits and reviews. In supporting this position, CalCPA hopes that California can become a “substantially equivalent” state and that we can then work toward extending practice privilege across state lines.
These issues are important to each of us. It is encouraged that you stay informed on these issues and communicate your thoughts on these matters to the decision makers, including the CBA and your local elected representatives.
A bright spot amidst all of this is that there is strength in numbers and CalCPA is on track to hit 30,000 members! Just imagine if all 30,000 of us showed up in Sacramento May 29 for CPA Day at the Capitol). If that were to occur, I am sure we could get resolution on some of these matters very quickly.
– Mark Croce, CPA
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Emerging Professional Group [View Photo]
The chapter’s Emerging Professionals Group recently welcomed Tom Sullivan, financial anchor/editor for KCRA–TV and host of “The Tom Sullivan Show” on radio station KFBK in Sacramento, Jan. 24. During the well-attended event, Sullivan discussed business and current affairs in the economy. His experience includes working as a tax accountant with Price Waterhouse & Co., founding The Sullivan Group investment firm and serving as managing director for The Sullivan Group of Wachovia Securities.
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Candidate Members
Nicholas Andrade, Baker Peterson & Franklin CPA LLP
Jennifer Carrillo, Kemper CPA Group LLP
Natalya Galindo, Kemper CPA Group LLP
Marshall Meyers, Warmerdam CPA Group LLP
Mauricio Origel Jr., Kemper CPA Group LLP
Daniel Currie, Grimbleby Coleman, CPAs, Inc.
Rosslyn Tejamo, University of the Pacific
Getting to Know You ...
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Many CalCPA members prefer to have information delivered to them at home. We appreciate that and will honor your preference. However, the more CalCPA knows and understands its members, the better we can serve you.
If you have not recently updated your professional information with CalCPA, please take a few minutes to do so. It will help us increase the value of your membership.
Update your info at www.calcpa.org/update.
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San Joaquin Chapter Leadership
Contact Chapter Coordinator Karen Howard
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